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University  of  California  •  Berkeley 


V  Library* 


i 


REPORT  OF  THE  COMMITTEE 


OF  THE 


fl)ramfc<r  of  JJfommm*  of  Ita   mnit  of 


PACIFIC  OCEAN  TELEGRAPHS, 


IN  CONNECTION  WITH 


THE  COMMERCE  OF  THE  WORLD 

PRESENTED  TO  THE  CHAMBER,   MARCH   2,   1871, 

BY   ME.    SAMUEL    B.    RUGGLES, 


CHAIRMAN  OF  THE   COMMITTEE. 


Jfrfo-gork : 

PRESS    OF    THE    CHAMBER   OP   COMMERCE. 
1871. 


/s 


JOHN    W.    AMERMAN,    PKINTER, 

No.  47  Cedar  Street,  N.  Y. 


of  $awmcw  of  the  j^iate  01 


PACIFIC  OCEAN  TELEGRAPHS. 


7b  *Ae  Chamber  of  Commerce  of  the  State  of  New-  York : 

THE  Committee  charged  with  the  subject  of  Telegraphs  and  Postal 
Affairs,  respectfully 

REPORT: 

That  the  subject  of  a  submarine  cable  across  the  Pacific  Avas  first 
brought  to  the  notice  of  the  Chamber  by  a  resolution  introduced 
on  the  5th  of  May,  1870,  and  duly  referred  to  the  Committee  for 
consideration. 

That  resolution  was  in  the  following  terms : 

Resolved,  That  the  Chamber  of  Commerce  of  the  State  of  New- 
York  approve  of  the  system  of  oceanic  telegraphic  communication, 
and  respectfully  ask  that  Congress  may  pass,  at  an  early  day,  such 
laws  as  will  facilitate  the  manufacturing  and  laying  of  a  submarine 
cable  across  the  Pacific,  from  the  western  coast  of  America  to  the 
eastern  coast  of  Asia,  thereby  completing,  with  lines  now  in  oper 
ation  and  with  those  soon  to  be  laid,  telegraphic  communication 
around  the  world. 

The  Committee  having  bestowed  upon  the  resolution  the  careful 
attention  due  to  the  importance  of  the  subject,  on  the  20th  of  De 
cember,  1870,  reported  it  back  to  the  Chamber,  modified  and 
amended  as  follows : 

Resolved,  That  the  Chamber  of  Commerce  of  the  State  of  New- 
York  regard  a  well-regulated  system  of  telegraphs,  by  sea  and 
by  land,  as  a  matter  of  primary  importance  to  the  interests  of  this 
country  and  of  the  world ;  and  respectfully  ask  that  Congress  may 
pass,  at  an  early  day,  such  laws  as  will,  without  creating  any  mo 
nopoly,  facilitate  the  laying  of  a  submarine  cable  across  the  Pacific 


Ocean,  from  the  western  coast  of  America  to  the  eastern  coast  of 
Asia,  thereby  completing,  with  the  lines  now  in  operation,  and  with 
those  soon  to  be  laid,  telegraphic  communication  around  the  world. 

The  resolution  in  this  form  having  been  unanimously  adopted  by 
the  Chamber,  authenticated  copies  were  transmitted  by  their  order 
to  the  Senate  and  House  of  Representatives  of  the  United  States. 

In  presenting  this  resolution  to  the  Chamber,  the  Committee  were 
prevented  by  want  of  time  from  fully  stating  the  facts  and  conside 
rations  which,  in  their  opinion,  would  justify  its  passage ;  in  view  of 
which,  the  Chamber,  on  the  2d  of  February,  18  VI,  directed  the  Com 
mittee  to  embody  and  to  report  in  writing  to  the  Chamber  those  facts 
and  considerations,  with  any  further  or  supplemental  information 
which  might  be  useful. 

In  the  present  report  the  Committee  have  examined  more  in 
detail : 

I.  The  locality  and  length  of  the  telegraphic  lines  already  estab 
lished,  and  of  those  which  are  still  needed  to  complete  a  commu 
nication  around  the  globe : 

II.  The  influence  of  the  work,  when  completed,  upon  the  com 
merce  of  the  world,  and  especially  the  commerce  on  the  Pacific  and 
the  Indian  Oceans. 

The  telegraph  lire  when  completed  will  necessarily  embrace  the 
360°  of  longitude  encompassing  the  globe.  This  great  circle  is 
divided  in  two  segments,  unequal  in  length,  but  each  containing  a 
continent  and  an  ocean.  The  Western  embraces  the  Western  Conti 
nent  and  the  Atlantic  Ocean,  extending  from  San  Francisco,  in 
California,  to  Valentia,  in  Ireland,  over  112°  of  longitude;  while 
the  Eastern  embraces  the  Eastern  Continent  and  the  Pacific  Ocean, 
extending  from  Yalentiato  Shanghai,  in  China,  over  132°  of  longi 
tude,  and  thence  across  the  Pacific  Ocean  over  the  remaining  116°, 
thus  completing  the  entire  circle  of  360°.  Of  these  two  segments 
of  this  great  terraqueous  line,  the  Western,  from  San  Francisco 
to  Valentia,  has  been  finished  largely,  if  not  mainly,  by  the  energies 
of  the  citizens  of  the  United  States.  Of  the  Eastern  segment,  the 
portion  crossing  the  Eastern  Continent  is  now  nearly  completed. 
Two  continuous  lines  extend  eastwardly  from  Valentia,  one  inclining 
to  the  north  through  the  United  Kingdom,  Germany,  European 
and  Asiatic  Russia,  to  the  present  temporary  terminus  at  Kiachta, 
an  important  Russian  entrepot  in  Eastern  Siberia,  near  the  Chinese 
frontier,  in  north  latitude  51°;  while  the  other  pursues  a  south- 


easterly  course  through  France,  Austria,  Turkey,  Persia,  and  other 
Asiatic  countries,  to  Bombay,  in  Hindustan,  and  thence  by  way  of 
Ceylon  to  Singapore,  only  1°  30'  north  of  the  Equator.  Kiachta 
is  116°,  and  Singapore  113°  east  from  Valentia.  The  land  line 
through  Turkey  and  Persia  being  liable  to  occasional  interruption 
in  regions  only  partially  civilized,  a  submarine  line  has  also  been 
laid  from  Italy  through  the  Mediterranean  Sea,  the  Red  Sea,  and 
the  Arabian  Sea,  to  Bombay. 

By  the  lines  above  described  commercial  and  other  messages  are 
now  regularly  telegraphed,  without  interruption,  from  London  to 
Kiachta  and  Singapore.  The  charge  from  London  to  Singapore  for 
twenty  words  and  less,  is  $33.25  in  gold ;  from  New-York  to  Singa 
pore,  $48.25  in  gold,  and  $1.50  for  each  additional  word  over  10 
words.  Even  at  this  costly  rate,  messages  are  now  constantly  sent 
from  New-York  to  Liverpool ;  four,  during  the  day  preceding  the 
date  of  this  report. 

Singapore  is  an  important  focal  point  in  the  commerce  of  the  East. 
It  was  established  by  the  British  Government,  in  1824,  and  now 
enjoys  a  yearly  commerce  of  nearly  $50,000,000.  It  has  lines  of 
steamers  running  to  Hong  Kong,  (near  Canton,)  in  six  days,  and  also 
to  Batavia,  Manilla  and  other  important  ports  in  the  East.  Through 
the  commercial  house  of  Messrs.  A.  A.  Low  &  BROTHERS,  of  New- 
York,  largely  engaged  in  the  trade  of  China  and  Japan,  the  Com 
mittee  have  ascertained  that  the  extension  of  the  submarine  cable 
from  Singapore  to  Hong  Kong,  about  1,400  miles,  and  thence  to 
Shanghai,  about  1,000  miles,  is  in  active  progress.  By  a  letter  re 
cently  received  by  Mr.  CYRUS  W.  FIELD,  and  exhibited  to  the  Com 
mittee,  they  are  informed  that  the  line  from  Singapore  to  Hong  Kong 
will  be  laid  by  the  1st  of  May,  and  be  in  actual  operation  by  the  1st 
of  June  next.  It  further  appears  by  The  Overland  Mail,  a  news 
paper  published  at  Hong  Kong,  that  the  wire  for  the  line  from  Hong 
Kong  to  Shanghai  has  all  arrived,  practically  securing  its  completion 
within  the  present  year.  Induced  by  political  or  religious  scruples, 
the  Chinese  Government  has  hitherto  prevented  the  laying  any  tele 
graphic  line  on  their  territory,  so  that  the  terminus  of  the  world- 
encircling  line  on  the  Eastern  Continent  will  probably  be  established 
for  a  time  in  the  light-ship  at  Shanghai,  in  the  estuary  of  the  Yang- 
Tse-Kiang,  the  great  river  of  Eastern  Asia.  At  this  important 
point,  the  junction  between  the  northern  and  southern  lines  will  be 
made,  through  the  enterprise  of  a  Danish  company,  at  Hong  Kong, 
now  actively  constructing  a  line  on  land  from  Kiachta,  about  1,400 
miles,  to  the  Sea  of  Japan,  to  be  extended  by  a  line  under  its  waters, 
about  1,000  miles,  to  Shanghai. 


0 

The  completion  of  these  lines  on  the  Eastern  Continent,  in  con 
nection  with  the  lines  now  established  in  the  Atlantic  and  upon  the 
Western  Continent,  will  afford  to  the  merchants  of  the  United 
States,  without  any  line  across  the  Pacific,  the  means  of  telegraphic 
communication,  not  requiring  more  than  three  days  at  the  utmost, 
"with  every  important  commercial  port  in  the  civilized  world  north  of 
the  equator.  Similar  facilities  will  soon  be  extended  to  the  Southern 
Hemisphere  by  the  Australian  branch,  leading  southeastwardly 
from  Singapore,  across  Sumatra,  Java  and  other  islands  of  the  great 
Eastern  Archipelago,  or  along  their  coasts,  into  Australia,  as  far  as 
Melbourne,  in  37°  south  latitude,  with  a  total  length  exceeding 
3,000  miles.  The  Committee  are  informed  by  Mr.  MILLER,  of  the 
Royal  Mint  of  Australia,  and  now  in  the  United  States,  that  this 
Australian  line  will  be  completed  to  Singapore  within  the  present 
year. 

It  must,  nevertheless,  be  evident  that  the  very  circuitous  com 
munication  from  New-York,  and  still  more  from  San  Francisco  to 
Eastern  Asia,  by  way  of  the  Western  Continent,  the  Atlantic  Ocean 
and  the  Eastern  Continent,  with  its  necessary  stoppages  under  the 
best  administration,  must  always  be  far  more  costly  and  dilatory 
than  a  communication  by  a  single  independent  line  leading  directly 
across  the  Pacific,  saving  in  distance  at  least  ten  thousand  miles,  and 
transmitting  a  message  from  San  Francisco  to  Shanghai  in  ten 
minutes.  Its  peculiar  value  in  war,  as  an  organ  of  the  Government, 
in  properly  directing  naval  operations  in  those  distant  waters,  can 
hardly  be  over-estimated.  We  should  also  bear  in  mind,  that  with 
telegraphic  lines  under  both  the  Atlantic  and  the  Pacific  Oceans, 
each  will  connect  the  two  continents,  so  that  any  interruption  in 
one  of  the  oceans  may  be  remedied  by  the  working  of  the  line  in 
the  other. 

A  far  higher  public  necessity  for  a  line  directly  across  the  Pa 
cific  is  found  in  the  fact,  that  the  wrhole  of  the  American  Continent, 
over  which  it  would  be  extended  to  the  Atlantic  and  thence  to 
Europe,  is  subject  to  the  sole  political  rule  of  the  United  States, 
or  of  the  adjacent  maritime  Provinces  of  British  America,  The 
populations  of  these  English-speaking  portions  of  the  world  would 
be  fully  able,  if  consolidated  by  political  union  or  allied  by 
proper  treaties,  to  protect  the  line,  \vhether  on  the  land  or  in  either 
of  the  oceans,  from  any  hostile  interference ;  while,  on  the  other 
hand,  the  line  laid  on  the  Eastern  Continent,  occupying  the  territory 
of  numerous  nations  of  Europe  and  Asia,  widely  differing  in  lan 
guage,  civilization  and  forms  of  government,  will  be  necessarily 


exposed  to  capricious  and  arbitrary  interruption,  if  not  to  violent 
aggression. 

Two  telegraphic  lines  under  the  Pacific  have  been  suggested  to 
the  Committee,  one  commencing  at  San  Francisco,  in  latitude  37°, 
and  deflecting  southwardly  to  the  Sandwich  Islands,  in  latitude  20°, 
and  thence  inclining  northwardly,  by  way  of  the  Midway  Island, 
in  latitude  27°  north,  to  Yokohama,  in  Japan,  in  latitude  35°  north, 
and  thence  southeasterly  to  Shanghai,  in  latitude  32°.  Its  length 
will  be  5,480  nautical  miles  from  San  Francisco  to  Yokohama,  and 
from  Yokahama  to  Shanghai  1,035  miles,  in  all  6,515  nautical  miles. 
The  other  and  more  northern  line  will  extend  from  San  Francisco 
along  the  coasts  of  British  Columbia,  Alaska  and  the  Aleutian 
Islands  to  the  eastern  coast  of  Japan,  and  thence  to  Shanghai. 

At  the  request  of  the  Committee,  the  Professor  of  Mathematics 
and  Astronomy  in  Columbia  College,  Mr.  WILLIAM  G.  PECK,  has 
accurately  measured  on  the  globe  the  linear  extent  of  the  "  great 
circle"  passing  through  San  Francisco  and  Yokohama.  His  letter, 
appended  to  this  report,  states  it  to  be  4,450  nautical  miles.  The 
circle  passes  within  200  miles  southward  of  the  Aleutian  Islands, 
now  belonging  to  the  United  States;  on  one  of  which,  lying  nearly 
midway  on  the  route,  the  cable,  if  necessary,  might  be  landed,  with 
out  increasing  the  total  distance  more  than  50  miles.  The  link  in 
the  chain  from  Yokohama  to  Shanghai,  1,035  miles  in  length,  is 
common  to  both  the  northern  and  the  southern  routes. 

It  is  not  the  province  nor  the  wish  of  the  Committee,  nor  would 
they  recommend  to  the  Chamber,  to  pass  any  judgment  on  the  com 
parative  merits  of  these  rival  lines  proposed  for  the  Pacific  cable, 
nor  to  anticipate  any  question  in  respect  to  its  construction,  whether 
directly  by  the  Government  or  indirectly  through  subsidies  to  incor 
porated  companies.  They  would  only  insist  on  the  vital  importance 
of  keeping  any  and  every  telegraphic  line,  under  the  Pacific  or  any 
other  ocean  or  sea,  as  far  as  possible,  free  from  any  exclusive  privi 
lege  or  monopoly.  The  oceans  and  seas  were  created  for  the  com 
mon  use  of  man,  and  should  not  be  exclusively  appropriated  by 
any  individual,  or  any  particular  nation  or  race. 

It  is  within  the  last  sixty  years,  that  the  genius  of  FULTON,  in 
ascending  the  Hudson  Iliver  with  a  steamboat  in  1807,  was  re 
warded,  however  inadequately,  by  a  grant  from  the  State  of  the 
monopoly  of  the  waters  of  that  important  channel  of  navigation, 
which  obstructed  its  commerce  until  the  year  1824,  when  the  unlaw 
ful  impediment  was  swept  away  by  the  supreme  judicial  power  of  the 
American  Union,  It  would  be  strange  indeed,  if  the  Union  should 


8 

now  so  far  forget  its  own  international  moral  duty  as  a  member  of  the 
common  family  of  nations,  as  to  monopolize  in  any  manner,  or  to 
any  extent,  the  common  oceanic  highway  between  America  and 
Asia. 

THE    INFLUENCE    OF   A   PACIFIC    OCEAN   CABLE    ON   THE    FOREIGN 
COMMERCE    OF    THE    WORLD. 


rhe  peculiar  value  and  efficiency  of  a  world-encircling  telegraph  in 
developing  and  regulating  the  commerce  of  the  globe  become  still 
more  evident,  in  view  of  the  immense  and  constantly  increasing 
amount  of  that  commerce  ;  and  especially  when  we  consider  the  inti 
mate  relation  of  the  commerce  of  every  portion  of  the  world  to  the 
commerce  of  the  whole. 

It  wiTftre  the  exalted  office  of  such  a  telegraph  to  diffuse  through  all 
the  markets  of  the  world  daily,  and  if  need  be,  hourly  information  of 
the  current  prices  of  all  commercial  commodities,  with  the  amount 
and  condition  of  products  and  cargoes.  This  annihilation  of  com 
mercial  distance  will  render  the  trader  practically  omnipresent. 
With  the  constant  stream  of  telegraphic  information,  pointing  out 
from  day  to  day  the  exact  degrees  of  demand  and  supply  —  the  vital 
elements  of  price  —  commerce,  no  longer  consisting  of  the  "  adven 
tures"  inscribed  on  the  merchant's  ledger,  will  become  an  exact 
science,  precisely  determining  every  commercial  movement  con 
taining  the  elements  of  profit. 

Nay,  more.  Such  a  telegraph  will  cement  still  more  firmly  that 
all-pervading  unity  of  commerce  known  in  modern  phraseology  as 
its  "  solidarity."  Differing  only  in  degree  from  "  internationally," 
which  regards  nations  as  forming  one  "  common  society,"  the  term 
"  solidarity,"  as  applied  to  their  commerce,  denotes  the  absolute 
unity  resulting  from  the  community  of  interest  where  the  commerce 
of  each,  forms  a  part  ''  in  solido"  of  the  commerce  of  the  whole. 

This  solidarity  brings  with  it  correlative  rights  and  duties,  with 
their  consequences.  Every  facility  afforded  to  any  portion  of  the 
world  of  commerce  enures  to  the  benefit  of  the  whole,  while  every 
impediment  in  any  portion,  whether  interposed  by  nature  or  unwise 
legislation,  injures  the  whole.  Cheap  and  rapid  transportation, 
which  has  already  increased  so  largely  the  wealth  of  modern  nations, 
is  now  the  common  desideratum  of  the  commercial  world.  Every 
day  and  every  penny  saved  in  transporting  a  chest  of  tea  through 
the  Indian  or  the  Pacific  Oceans,  is  felt  in  its  diminished  price  in  the 
markets  of  Chicago,  Hamburgh  or  St.  Petersburgh.  Every  day  and 
every  cent  saved  in  transporting  a  barrel  of  flour  over  any  canal  or 


9 

railway  in  the  United  States,  facilitates  its  sale  in  Havana,  Liverpool 
or  Canton.  Like  the  life-blood  in  the  human  frame,  ever  ministering 
to  the  needs  of  all  the  members,  the  genial  and  vital  stream  of 
commerce,  unchecked  by  needless  obstruction,  circulates  through 
the  globe,  animating  and  strengthening  all  the  nations,  while  the 
telegraph,  the  very  brain  of  the  commercial  system,  supplies  the 
nervous  energy  which  directs  and  guides  the  whole. 

This  universality  or  "  catholicity"  of  commerce,  so  to  speak,  is  no 
new  idea  in  the  New- York  Chamber  of  Commerce.  On  the  con 
trary,  it  has  been  the  polar  star  guiding  the  institution  from  the 
very  moment  of  its  corporate  existence.  It  shines  out  clear  and 
bright,  in  the  emphatic  language  of  the  Royal  Charter  granted 
during  the  Colonial  era,  in  1770,  and  fully  confirmed  by  the  State 
Government  in  1784,  proclaiming  that  "numberless  inestimable 
"  blessings  had  accrued  to  mankind  from  commerce,"  and  investing 
the  Chamber  with  full  power  "to  encourage  and  promote,  by  just 
"  and  lawful  ways  and  means,  such  measures  as  will  tend  to  promote 
"  and  extend  just  and  lawful  commerce." 

So  far  from  breathing  any  local  spirit  which  would  confine  the 
field  of  inquiry  or  action  of  the  Chamber  to  the  mere  island  of 
Manhattan,  or  within  any  narrow  provincial  limits,  the  charter  broad 
ly  avows  the  comprehensive  and  wise  design  of  the  British  Crown, 
"  to  give  stability  to  an  institution  from  whence  great  advantages 
"  may  arise,  not  only  to  our  said  Province,  but  as  well  to  our  Kingdom 
u  of  Great  Britain,"  that  Imperial  Dominion,  which  even  then  had  en 
compassed  with  its  widespread  dependencies  the  whole  world  of 
commerce.  Under  such  instruction  the  Chamber  has  ever  been 
impressed,  and  now  more  than  ever,  with  the  fundamental  and 
pregnant  truth,  that  the  foreign  commerce  of  the  port  of  New- 
York  is  not  local,  but  cosmopolitan,  constituting  110  isolated  inde 
pendent  unit,  but  an  inseparable  integral  portion  of  the  vast  for 
eign  commerce  of  the  globe,  morally  united  by  one  common  bond 
of  interest. 

The  practical  importance  of  this  view  is  obvious,  when  we  find  that 
the  whole  yearly  commerce  of  the  United  States  (being  $849,793,476 
in  1868,  of  which  the  port  of  New- York  had  $498,623,192)  now  con 
stitutes  hardly  one-tenth  of  the  foreign  commerce  of  the  world. 

AMOUNT     OF      FOREIGN     COMMERCE     AND     ITS     PROGRESS     IN     THIRTY 

YEARS. 

In  collecting  the  facts  needed  for  showing  the  total  foreign  com 
merce  of  the  civilized  nations,  the  Committee  have  endeavored  also 


10 

to  ascertain,  as  far  as  practicable,  its  progress  during  the  thirty  years 
ending  with  1868,  that  being  the  latest  year  for  which  official  tables 
were  accessible. 

The  period  thus  selected  is  one  of  pre-eminent  importance,  embra 
cing  the  truly  golden  age  of  commerce,  in  which  steam  more  fully 
enlisted  in  the  service  of  man,  wen  its  greatest  victories  over  the 
land  and  the  sea,  vastly  augmenting  the  commercial  dynamics  of 
the  globe,  not  only  in  accelerating  and  cheapening  the  transporta 
tion  of  the  products  of  interior  regions  to  the  seaboard,  but  in  prac 
tically  bridging  the  oceans  themselves  and  conjoining  the  continents. 

It  was  not  until  the  autumn  of  the  year  1838,  that  the  first  ocean 
steamer  found  its  solitary  way  across  the  Atlantic.  At  the  close  of 
1868,  large  fleets  of  steamers,  much  exceeding  in  capacity  the  sail 
ing  vessels  of  the  mercantile  marine,  and  swiftly  impelled  by  this 
superadded  power,  covered  all  the  seas  and  oceans. 

Up  to  the  year  1838,  only  1,497  miles  of  railway  had  been  con 
structed  in  North  America,  and  furnished  only  with  feeble  engines 
drawing  slender  loads.  At  the  close  of  1868  there  were  in  opera 
tion,  with  engines  doubled  in  speed  and  quadrupled  in  power, 
44,802  miles  in  North  America,  56,660  miles  in  Europe,  4,474  in 
Asia,  (principally  in  British  India,)  1,424  in  South  America,  789  in 
Australia,  and  583  in  Egypt  and  other  parts  of  Africa,  exhibiting  a 
total  development  in  the  civilized  world  of  109,177  miles,  of  which  at 
least  100,000  were  brought  into  use  since  1838,  with  their  enormous 
apparatus  of  steam  locomotive  engines  counted  by  tens  of  thousands, 
untiringly  laboring  by  day  and  by  night  in  transporting  and  ex- 
Changing  the  vast  and  varied  products  of  the  globe. 
V  It  was  on  the  27th  day  of  February,  in  the  year  1844,  that  MORSE 
sent  his  first  telegraphic  message  by  electricity,  41  miles,  from 
Washington  to  Baltimore,  uttering  with  characteristic  and^solemn 
emphasis  his  grateful  ejaculation,  "  What  hath  GOD  wrolight !'/  At 
the  close  of  1868,  as  stated  to  the  Committee  by  Mr.  GEORGE  B. 
PBESCOTT,  the  electrician  of  the  Western  Union  Telegraph,  ^  there 
were  130,698  miles  of  electrical  telegraphic  line  in  operation  in  the 
United  States,  90,000  miles  irTdreat  Britain,  and  405,151  miles  in 
Continental  Europe,  with  27,402  miles  of  submarine  cable  in  the 
various  seas  and  oceans,  having  a  total  linear  extent  of  572,183 
miles,  exceeding  more  than  twenty  fold  the  circumference  of  the 
earth. 

/It  was  not  until  1866  that  the  noble  perseverance  of  FIELD  and  his 
associates,  after  arduous  and  repeated  efforts,  practically  established 
for  commercial  purposes  their  cable  in  the  bed  of  the  Atlantic, 


11 

These  splendid  triumphs  over  the  obstacles  of  nature  within  the 
brief  period  of  thirty  years  under  review,  superadding  to  the  pre 
existing  forces  in  use  by  man  a  power,  equivalent  to  that  of  twenties, 
if  not  fifties,  of  millions  of  human  laborers,  have  necessarily  caused 
an  immense  expansion  in  the  commerce  of  the  globe.  They  afford 
the  only  adequate  explanation  of  the  enormous,  and  almost  incre 
dible  realities  disclosed  by  the  official  statistics,  exhibiting  an  in 
crease  in  the  foreign  trade  of  the  three  leading  commercial  nations 
exceeding  more  than  tenfold  their  increase  in  population  within 
the  same  period  ;  and  a  rate  of  increase  more  than  half  as  large  in 
the  foreign  commerce  of  the  remaining  nations. 

Summed  up  in  brief,  the  population  and  foreign  commerce  of  the 
United  Kingdom  of  Great  Britain  and  Ireland,  of  France,  and  of 
the  United  States  of  America,  respectively  increased  as  follows : 


POPULATION. 


The  United  Kingdom,  . 
France  

In  1838. 

.     25,903,697 
.     33  738  188 

In  1858. 
28,389,770 
36,236,322 

In  1868. 

30,380,757 
*38,342  818 

The  United  States,  

.     16,025,701 

29,568,110 

36,500,000 

75,667,646        . .        94,194,202  105,223,575 

Increase  in  30  years,  29,555,950,  being  39  per  cent. 

FOKEIGN  COMMERCE. 
[Computing  £1  at  $5,  and  $1  at  five  francs.] 


In  1838.  In  1858.  In  1868. 

The  United  Kingdom, ..    $541,605,515  ..  $1,521,833,055  ..    $2,616,570,415 

France, 378,895,720  ..  f945,080,000  ..    $1,595,820,000 

The  United  States, 222,504,020  . .  607,257,571  . .         849,793,476 


$1,143,005,255      ..   $3,074,170,626      ..   $5,062,183,891 
Increase  in  30  years,  $3,919,178,636,  or  443  per  cent. 

It  will  be  seen  that  the  rate  of  this  immense  increase  was  highest 
in  the  two  first  decades,  from  1838  to  1858,  commencing  with  the 
earliest  developments  of  this  superadded  steam  power  on  the  land 
and  the  sea,  during  which  the  amount  was  carried  up,  in  round 
numbers,  from  $1,143,000,000  to  $3,074,000,000,  being  nearly  270 
per  cent.,  or  9  per  cent,  yearly  for  the  twenty  years.  In  the  last 
decade,  from  1 858  to  1 868,  when  the  new  impulse  had  partially  spent 
its  power,  the  rate  of  increase  so  far  slackened,  that  the  total  of 
1858,  $3,074,000,000,  rose  only  to  $5,062,000,000  in  1868,  not  quite 
00  per  cent.,  or  6  per  cent,  yearly. 

*  Including  744,249,  annexed  in  Nice  and  Savoy.-* 
f  By  sea,  $678,000,000  ;  by  land,  $266,000,000. 
$  By  sea,  $1,070,000,000  ;  by  land,  $525,000,000. 


12 

This  diminution  of  rate  in  the  last  decade  shows  the  necessity 
of  caution  in  any  prospective  estimate  of  the  increase  in  the  future. 
While,  on  the  one  hand,  a  still  further  development  of  the  powers 
of  steam  and  electricity  may  stimulate  still  more  actively  the  pro 
duction  and  transportation  of  the  world,  we  are  compelled  by  recent 
experience  in  both  hemispheres  to  take  into  account  the  possibility, 
to  say  the  least,  of  exceptional  interruptions  and  retardations  by 
war,  and  the  supreme  national  necessities  which  it  may  involve.  In 
view  of  those  contingencies,  it  would  hardly  be  safe  to  assume  that 
the  rate  of  six  per  cent,  yearly  increase  exhibited  by  the  last  decade 
will  continue  undirninished  throughout  the  remaining  thirty  years  of 
the  present  century,  carrying  up  the  existing  amount,  as  it  would 
at  180  per  cent,  in  the  three  nations,  to  $14,170,000,000.  A  more 
cautious  estimate,  at  3  per  cent,  yearly,  would  carry  the  amount 
only  to  $9,112,000,000. 

The  Committee  make  no  predictions  in  respect  to  the  future,  but 
merely  state  the  preceding  sums  as  the  arithmetical  results  of  the  I 
two    different   rates    of   increase.      They    rest    content    with    the  I 
85,002,183,891  actually  existing  in  1868,  and  with  the  increase  in  the/ 
foreign    commerce  of  the  United  States   to    $991,896,889  in  18701 
from  $849,793,476  in  1868,  as  sufficing  to  show  the  transcendent  im* 
portance  of  establishing  and  maintaining  between  these  three  mari 
time  nations  a  wise  and  thorough  concord,  which  shall  at  least  secure 
the  telegraphic  cables  in  the  oceans  from  any  hostile  aggression. 

It  may  also  be  reasonably  expected,  that  the  large  and  steadily 
increasing  foreign  commerce  of  the  remaining  and  more  interior  na 
tions  of  Europe,  the  major  portion  of  which  is  on  the  sea,  will 
lead  their  enlightened  rulers  to  similar  views  of  the  necessity  of 
peace,  as  affording  to  maritime  commerce  its  only  effectual  security. 

The  Committee  have  used  their  best  efforts  without  success,  to 
obtain  official  tables  showing  the  commerce  of  these  remaining 
nations  and  its  progress  in  tabulated  form,  with  the  precision 
which  has  been  attained  with  respect  to  the  three  maritime  nations. 
Some  of  the  Continental  countries  make  no  official  returns  of  their 
exports,  while  the  estimates  of  some  of  the  others  are  in  a  measure 
conjectural. 

During  the  last  twenty  years  repeated  efforts  have  been  made,  by 
the  public  authorities  and  writers  in  France  and  elsewhere  to  tabu 
late  the  foreign  commerce  of  the  world,  the  general  results  of  which 
have  not  differed  very  widely.  After  carefully  comparing  the  vary 
ing  estimates  by  the  British  Board  of  Trade,  the  United  States 
Bureau  of  Statistics,  the  "  Dicticnnaire  du  Commerce"  and  other 
statistical  works  in  France,  aided  by  the  results  annually  condensed 


from  official  tables  in  the  "  Almanac  de  Gotha"  the  Committee 
submit  the  following  summary  to  the  Chamber  as  an  approximate 
for  the  years  1860  and  1868,  sufficiently  accurate  for  the  present 
purpose.  Disregarding  fractions  of  a  million,  the  foreign  com 
merce  of  those  nations  was  as  follows  : 


Population. 


Foreign  Commerce. 


In  1868. 

In  I860. 

In  1868. 

38,768,000 

$550,000,000 

$756,000,000 

3,616,000 

360,000,000 

377,000,000 

4,901,000 

210,000,000 

304,000,000 

7,779,000 

125,000,000 

138,000,000 

69,884,000 

252,000,000 

387,000,000 

35,449,000 

187,000,000 

340,000,000 

25,585,000 

250,000,000 

316,000,000 

16,328,000 

130,000,000 

140,000,000 

1,375,000 

16,000,000 

16,000,000 

20,884,000 

140,000,000 

187,000,000 

2,517,000 

120,000,000 

1-^.000,000 

Germany, 

Netherlands,   

Belgium, 

Denmark,  Sweden  and  Norway,. 

Russia, 

Austria, 

Italy, 

European  Turkey,  Roumania  and 

Serbia, 

Greece, 

Spain  and  Portugal, 

Switzerland,. . 


227,086,COO    $2,340,000,000     $3,091,000,000 
Increase,  32  per  cent,  in  8  years,  or  4  per  cent,  yearly. 

In  any  estimate  of  the  future  growth  of  the  foreign  commerce  of 
these  Continental  nations,  now  amounting  to  $3,091,000,000,  it 
should  be  remembered  that  the  superaddition  of  steam  transporta 
tion,  in  fostering  the  growth  of  their  commerce  in  the  past,  was,  in 
proportion,  far  less  than  in  France  and  the  United  Kingdom.  With 
an  aggregate  population  of  227,000,000,  occupying  a  territorial  area 
more  than  tenfold  that  of  France  and  the  United  Kingdom,  they  had, 
up  to  1869,  only  37,000  miles  of  railway;  while  France  and  the 
United  Kingdom,  with  a  population  of  only  69,000,000,  had  in  ope 
ration  more  than  24,000  miles,  nearly  completing  all  the  important 
portions  of  their  railway  systems.  The  continental  nations  still  have 
left  large  interior  regions,  affording  very  extensive  fields  for  future 
development,  especially  in  connection  with  the  inland  seas  giving 
them  access  to  the  Atlantic.  They  are,  moreover,  using  active 
efforts  to  increase  their  maritime  commerce  and  naval  force,  as  fun 
damental  elements  of  their  political  strength. 

It  certainly  is  not  impossible  that,  under  these  influences,  the  rate 
of  increase  in  their  foreign  commerce  may,  for  some  time  to  come, 
fully  keep  pace  with  that  of  France  or  the  United  Kingdom.  At 
the  yearly  rate  of  only  2£  per  cent,,  the  existing  amount  would 
increase  to  $5,322,000,000  in  the  thirty  years  ending  with  1898. 


14 


COMMERCE    OF    AMERICAN    NATIOXS. 

In  respect  to  the  countries,  other  than  the  United  States,  in 
North  and  South  America,  including  the  West  Indies,  the  Com 
mittee  have  been  able  to  obtain  reliable  statistics  only  from  a  por 
tion  of  their  number.  Some  of  them  keep  no  accurate  tables  of 
exports,  while  the  commerce  of  others  is  stated  in  quantities  and 
not  in  values.  The  aggregate  of  the  commerce  of  the  West  Indies, 
a  subject  of  direct  and  constantly  increasing  interest  to  the  United 
States,  can  only  be  ascertained  with  accuracy  from  the  official 
tables  kept  by  the  various  nations  trading  with  the  islands.  As 
the  amount  thereby  deduced  ($282,897,306)  falls  very  considerably 
short  of  the  amount  ($420,580,919)  estimated  in  the  official  report 
published  in  1866,  at  Ottawa,  b}T  the  Commissioners  from  British 
America  for  ascertaining  the  trade  of  the  West  Indies,  some  further 
examination  may  be  proper.  The  Committee,  therefore,  ask  leave 
hereafter  to  submit  to  the  Chamber  any  supplemental  statement 
which  may  be  needed,  for  correcting  any  material  error  which 
may  be  discovered. 

Subject  to  this  reservation,  the  Committee  believe  that  the  fol 
lowing  summary  will  not  vary  materially  from  the  actual  amounts  : 

1868,  Exports  ar,d 

Imports. 
"  Dominion  of  Canada,"  (not  including  Newfoundland  or  Prince 

Edward's  Island,) $129,533,194 

Mexico,  only  partial  returns,  (estimated,) 27,000,000 

Central  America, 11,292,000 

New-Grenada  or  Colombia, 11,018,000 

Venezuela,  no  returns,  (estimated,) 10,000,000 

Brazil, 160,133,721 

Argentine  Republic, 63,650,000 

Chili, 55,500,000 

Uraguay,  Peru,  Bolivia  and  Ecuador,  only  partial  returns,  (esti 
mated,) 40,000,000 

West  Indies.— Cuba  and  Porto  Rico, $174,050,279 

British  West  Indies, 60,756,022 

Hayti  and  San  Domingo 22.691,005 

Other  West  India  Islands, 25,000,000 

282,497,306 


$790,624,221 

The  statistics  of  many  of  these  nations  and  countries,  owing 
mainly  to  the  frequent  and  violent  changes  in  their  political  condi 
tion,  are  too  fragmentary  to  furnish  the  means  of  showing,  with  any 
approach  to  accuracy,  the  increase  of  their  commerce  in  the  past. 


15 

The  singular  mutations  of  commerce,  under  political  changes,  are 
strikingly  manifest  in  a  portion  of  the  West  Indies!  The  "  Tableau" 
of  Commerce,  of  the  year  III.  of  the  first  French  Republic,  states 
that,  in  or  shortly  before  the  year  1 792,  the  commerce  of  France  with 
San  Domingo  amounted  to  two  hundred  and  seventy-one  millions 
of  livres,  $54,200,000;  and  that  its  commerce  with  the  United 
States  amounted  in  that  year  only  to  thirty-one  millions  of  Uvres., 
$6,200,000. 

The  "  Expose  Comparatif"  of  France  shows  that  in  1867  its  com 
merce  with  Hayti  was  only  $6,420,000,  while  its  commerce  with 
the  United  States  was  $70,200,000. 

GENERAL   RESULT. 

It  results  from  the  preceding  examination  that  the  total  foreign 
commerce  of  the  European  and  American  nations,  in  which  is 
included  all  their  commerce  with  the  Asiatic  countries,  consists  as 
follows : 

Commerce  of  the  European  nations, $7,203,390,415 

"  "     American        "         1,640,822,697 

$8,844,213,112 

Of  this  total,  a  little  more  than  one-tenth  consists  of  commerce 
with  countries  and  localities  more  or  less  civilized,  in  Asia,  Africa 
and  Oceanica,  which  have  no  commercial  tables,  or  none  which  are 
accessible,  and  consequently  are  not  included  in  the  statement  of 
nations  exporting  and  importing.  That  portion  is  stated  from  the 
returns  of  the  nations  trading  writh  those  countries,  and  represents  an 
actual  movement  of  commodities  of  like  value.  Of  the  remainder, 
assumed  to  be  nine-tenths,  the  value  of  the  commodities  actually 
moved  is  only  one-half;  for  the  reason  that  the  commodities  tabu 
lated  as  "  Exports,"  in  the  tables  of  any  nation  exporting,  re-appear 
as  "Imports"  in  the  tables  of  the  nation  or  nations  to  which  the 
commodities  are  exported,  Avhereby  the  values  arc  duplicated.  This 
being  the  case,  the  aggregate  value  of  the  commodities  actually 
moved  is, 

One  tenth  of  the  $8,844,213,112,  or $884,421,311 

And. one-half  of  the  residue,  $7,959,791,801,  being 3,979,895,901 

$4,864,317,212 

Although  the  Committee  have  confined  their  examination  to 
foreign  commerce,  it*  should  be  borne  in  mind  that  the  proposed- 
Pacific  Ocean  Telegraph  will  also  exert  a  beneficial  influence  on  the 
coasting  trade  of  many  of  the  nations.  This  is  specially  true  in 
respect  to  the  United  States,  with  its  long  lines  of  coast  on  the 


16 

Atlantic,  the  Gulf  of  Mexico  and  the  Pacific,  requiring  in  the  coast 
ing  trade  with  the  Pacific,  the  circumnavigation  of  the  continent  of 
South  America,  passing  for  more  than  ten  thousand  miles  along  the 
coasts  of  foreign  nations. 

It  is  much  to  be  regretted  that  no  official  account  has  yet  been 
kept  by  the  United  States,  nor  by.any  other  maritime  nation,  (as 
the  Committee  believe,)  of  the  values  of  the  property  moved  in  their 
coasting  trade.  Its  amount  in  the  United  States  undoubtedly  far 
exceeds,  and  in  the  United  Kingdom  probably  approaches,  if  it  does 
not  exceed,  the  total  values  actually  carried  in  their  foreign  com 
merce. 

COMMERCE    OF   THE    PACIFIC   AND   INDIAN    OCEANS. 

The  Committee  have  deemed  it  necessary  to  ascertain  and  to  state 
somewhat  more  in  detail,  the  amount  of  the  commerce  of  the  Euro 
pean  and  American  nations  on  the  Pacific  and  Indian  Oceans. 
Forming  a  part  of  the  total  above  exhibited,  it  has  a  peculiar  inter 
est,  not  only  in  being  primarily  and  directly  connected  with  the 
proposed  Pacific  Telegraph,  but  in  being  closely  interwoven  with 
the  commerce  of  every  other  portion  of  the  civilized  world,  and  the 
daily  necessities  of  all  its  varied  population. 

These  great  oceans  have  played  and  will  continue  to  play  a  very 
important  part  in  the  great  drama  of  commercial  progress,  empha 
tically  the  epic  of  the  modern  ages.  The  history  of  Eastern  Asia, 
covering  an  epoch  of  nearly  four  centuries  since  VASCO  DE  GAMA 
doubled  the  Cape  of  Good  Hope,  is  filled  with  the  lights  and  shadows 
of  one  long  struggle  of  the  maritime  nations  of  Europe  to  secure, 
and  as  far  as  possible  to  monopolize,  the  trade  of  that  fertile  and  fra 
grant  portion  of  the  globe.  The  rich  products  of  the  Spice  Islands 
under  the  burning  sun  of  the  equator,  repeatedly  became  the  scene  of 
cruel  war  between  cold-blooded  trading  nations  on  the  Northern 
Ocean ;  while  the  field  of  bloody  struggle  in  Hindustan  extended 
from  the  groves  of  Ceylon  to  the  frozen  summits  of  the  Himalayas. 
The  long-continued  conflicts  in  these  remote  regions  of  the  earth 
were  not  solely  for  commerce,  but  often  for  empire,  intermingling 
with  the  broader  struggles  at  home  for  the  mastery  of  Europe. 
Within  the  present  century,  we  have  seen  the  navy  of  England,  in 
defending  and  preserving  not  only  her  national  existence  but  the 
liberties  of  the  world  from  the  tyranny  of  the  first  NAPOLEON, 
sweeping  the  commerce  of  his  empire  from  every  ocean  of  the  globe 
to  the  utmost  bounds  of  these  distant  waters,  so  that  in  1807,  in  the 
vivid  language  of  a  writer  of  the  day,  "not  a  single  merchant  ship 


17 

bearing  a  hostile  flag  could  be  seen  traversing  the  Atlantic  or 
crossing  the  equator."  As  late  as  1811,  at  the  height  of  the  fearful 
struggle  on  the  land,  the  magnificent  island  of  Java,  the  Cuba  of  the 
East,  which  had  shared  the  fate  of  Holland,  was  wrested  by  England 
from  the  grasp  of  France.  Restored  on  the  pacification  of  Europe 
to  its  former  owner,  it  still  remains  a  precious  remnant  of  the  mari 
time  and  commercial  power  enjoyed  in  the  palmy  days  of  the  Dutch 
Republic. 

The  struggle  of  centuries  for  the  possession  of  Continental  In 
dia,  between  Portugal,  Spain,  Holland,  France  and  England  suc 
cessively  contending  for  the  prize,  has  practically  closed  with  the 
lion's  share  falling  to  our  ancestral  England,  apparently  to  be  held, 
with  the  English-speaking  continent  of  Australia  and  the  outlying 
islands  of  New-Zealand,  with  their  rapidly  increasing  commerce, 
only  for  a  future  and  friendly  competition,  on  a  far  broader  scale, 
with  the  inheritors  of  her  blood  in  the  United  States.  It  surely  is 
not  the  least  among  the  wonder-working  effects  of  steam  in  naviga 
ting  the  land  with  a  speed  far  surpassing  that  on  the  sea,  that  the 
railway  now  spanning  our  continent,  with  its  electrical  auxiliary 
in  the  Pacific,  will  bring  the  American  Union  into  the  close  prox 
imity  needed  for  such  a  competition.* 

The  statistics  of  the  commerce  of  the  nations  of  Europe  and 
America  on  the  Pacific  and  the  Indian  Oceans,  and  its  distribution 
among  those  nations,  will  fully  appear,  with  some  particulars  of  its 
past  progress,  in  the  table  appended  to  this  report.  Summed  up 
in  brief,  the  commerce  on  those  wraters  of  the 

United  Kingdom,  in  1868,  was $565,106,665 

France,                              "     59,340,000 

The  United  States,          "     47,656-,885 

Netherlands,                     "     51,500,000 

Hamburgh  and  Bremen,  "     9,328,000 

Spain,                                "     1,750,000 

Sweden  and  Norway,      "     460,000 


$735,141,550 
The  overland  "  Transba'ikal"  commerce  of  Russia  with  China, 

in  1867,  was  11,300,000  roubles,  or '  9,040,000 


$744,181,550 


*  Of  the  Anglo-Indian  Empire,  the  islands  of  New-Zealand  lie  1,400  miles  east 
of  Australia,  and  so  much  the  nearer  to  the  coast  of  the  United  States.  They 
had  1,611  miles  of  telegraphic  line  in  1869,  which  must  ere  long  be  connected 
with  Australia. 

2 


18 

In  addition  to  the  interchanges  effected  by  the  preceding  com 
merce  between  the  European  and  American  nations  and  the  countries 
of  Asia,  there  is  now  a  large  coasting  commerce  in  the  Indo-Chinese 
Basin.  Of  this  "  home  trade,"  so  to  speak,  a  small  portion  employs 
the  vessels  of  the  Asiatic  countries,  while  the  residue  is  enjoyed  by 
European  vessels,  principally  from  the  Hanseatic  Cities,  interchang 
ing  the  products  of  Japan  and  China  with  those  of  British  India  and 
the  Australasian  Archipelago.  Like  the  coasting  trade  of  the  At 
lantic  nations,  it  serves  to  swell  the  total  commerce  interested  in 
the  completion  of  the  Pacific  cable. 

From  the  detailed  statements  in  the  table,  the  following  general 
facts  will  appear : 

1.  Of  the  commerce  of  Europe  and  America  with  Asia, 

on  the  Pacific  and  Indian  Oceans,  being  in  1868,  $735,141,550 
the  three  maritime  powers,  the  United  Kingdom, 

France  and  the  United  States,  had 672,103,550 

2.  Their  commerce  on  those  oceans  in  1854  was, . . .     330,079,742 

showing  an  increase  in  the  14  years  of $342,023,808 

being  103  per  cent.,  or  7.35  per  cent,  yearly. 

3.  From  the  proportion  of  exports  to  imports  shown  by  the  tables 

of  the  three  nations,  we  may  safely  estimate,  that  of  the  total 
commerce  of  $735,141,550,  the  exports  to  the  Asiatic  countries 
did  not  exceed  $300,000,000,  so  that  the  imports  from  these 
countries  were  at  least  $435,141,550. 

4.  Of  the  last  named  amount,  Australia  and  New-Zealand  fur 

nished  $62,942,240,  and  the  more  tropical  countries  of  Asia 

the  remaining  $372,199,310. 

It  is  this  latter  portion  which  imparts  to  the  commerce  on  the 
Pacific  and  Indian  Oceans  its  peculiar  interest,  embracing  the  tea,  the 
coffee,  the  sugar,  the  spices,  the  silk,  the  drugs,  and  the  various  other 
products  of  the  tropics,  which,  in  the  progress  of  civilization,  ceasing 
to  be  luxuries,  have  become  necessities  for  the  three  hundred  and 
twenty  millions  of  Christian  people,  now  occupying  the  temperate 
zone  of 'Europe  and  North  America.  Intended  for  the  consumption 
of  such  a  multitude,  these  tropical  products  are  concentrated,  in 
large  masses,  in  the  capacious  docks  or  warehouses  of  London  and 
Liverpool  and  Havre  and  Antwerp  and  the  Hanseatic  Cities,  to  be 
thence  distributed  through  the  world  by  the  united  machinery  of 
its  common  commerce,  permeating  and  interpenetrating  every  artery 
and  vein  of  human  society. 


19 

It  surely  requires  no  great  stretch  of  imagination  or  credulity  to 
believe  that  a  commerce  so  beneficent  and  civilizing,  in  a  world  like 
ours  filling  up  with  people  so  rapidly,  is  destined  to  large  and 
speedy  increase,  especially  if  wisely  aided  by  our  national  govern 
ment.  It  is  not  for  the  clear-headed,  far-sighted  merchants  of  the 
United  States  to  close  their  eyes  upon  the  fact  that,  in  the  provi 
dential  march  of  events,  a  field  so  vast  is  just  opening  to  their 
well-directed  energy.  Still  less  will  they  fail  to  bear  in  mind,  that 
"  cheapness,  the  sovereign  law  of  commerce,  overcoming  national 
"  prejudices  and  national  habits,"  will  inexorably  compel  the  pro 
ducts  of  every  portion  of  the  globe,  and  especially  of  its  remoter 
regions,  to  take  the  shortest  and  cheapest  way  to  market ;  that  the 
distance,  by  sea  and  land,  from  the  coast  of  China  to  the  Missis 
sippi  River,  by  way  of  the  Pacific  Ocean,  is  less  than  one-third  of 
the  distance  by  way  of  the  Atlantic ;  and  that,  as  a  necessary  result, 
San  Francisco,  our  own  Pacific  emporium,  with  her  spacious  ware 
houses  soon  to  cluster  around  the  "  Golden  Gate,"  will  become  the 
mart  for  largely  supplying,  at  least  a  portion  of  our  widespread 
interior,  with  the  products  of  Eastern  Asia.  The  commercial  tables 
show  the  breadstuff's  of  California  actively  entering  on  their  great 
predestined  duty  of  supplying  the  daily  necessities  of  China,  Japan, 
Australia  and  New-Zealand ;  laying  the  foundation  of  a  commerce 
of  the  highest  importance  to  both  the  continents.  The  diplomatic 
wisdom  of  our  timely  treaty  with  Japan  is  now  plainly  evident, 
not  only  in  the  steadily  increasing  commerce  between  the  two  coun 
tries,  but  in  the  cordial  diplomatic  relations  now  fully  established 
with  the  government  of  that  intelligent  and  active  nation. 

It  is  for  the  statesman  rather  than  the  merchant  to  look  out  afar 
upon  the  coming  ages,  and  discern  the  immense  eventualities  of 
these  great  tropical  waters,  once  so  remote,  but  now  coming  so 
plainly  within  the  legitimate  field  of  action  of  our  young  and  grow 
ing  Republic.  The  Committee  will  not  attempt  to  lift  the  veil  of 
the  majestic  future,  nor  seek  in  any  way  to  measure  or  estimate  the 
enormous  stream  of  commerce  and  intercourse  which  must  flow 
from  intimate  and  friendly  relations  with  the  vast  populations 
now  accumulated  in  Eastern  Asia.  They  will  venture  to  hope 
that  the  existing  commerce  of  the  world,  exhibited  as  one  undivided 
whole,  will  be  sufficient,  in  the  eyes  of  the  Chamber,  to  justify  an 
earnest  recommendation  to  the  Government  of  the  United  States,  to 
adopt  vigorous  measures,  without  delay,  for  connecting  the  conti 
nents  of  America  and  Asia  by  a  submarine  electric  Telegraph,  to  be 
laid  in  such  portion  of  the  Pacific  as  may  complete  a  line  encircling 


20 

the  globe,  and  best  subserve  the  interests  of  our  country  and  the 
world. 

The  American  Union,  in  its  gradual  but  steady  aggregation  of 
empire,  already  possesses  a  water  front  on  the  Pacific,  in  two  dis 
connected  portions,  embracing,  taken  together,  twenty-eight  degrees 
of  latitude,  and  separated  only  by  that  portion  still  belonging  to 
British  America,  extending  from  latitude  49°  to  latitude  54°  40',  a 
parallel  not  wholly  unknown  in  our  political  history. 

On  the  opposite  shore  of  the  Pacific,  the  British  Empire  has  ac 
quired,  by  treaty  or  otherwise,  territorial  rights  to  some  extent  in 
or  near  some  of  the  maritime  cities  of  China,  which  may  greatly 
facilitate  the  connection  of  the  Pacific  cable  with  the  segment  of  the 
world-encircling  line  laid  upon  the  Eastern  Continent  or  under  its 
adjacent  waters.  It  will  be  providential,  indeed,  if  the  facilities 
thus  enjoyed  by  the  two  nations,  with  their  widespread  territories 
on  this  broad  ocean,  shall  lead  them,  at  a  moment  like  the  present, 
when  lasting  concord  is  the  prayer  of  every  patriotic  heart,  to  unite 
in  completing  the  great  achievement  of  our  age,  to  be  consecrated 
to  Peace  forever. 

SAMUEL  B.  RUGGLES, 

Chairman  of  the  Committee. 

CHAMBER    OF  COMMERCE, 

New- York,  March  Id,  1871. 


At  the  regular  monthly  meeting  of  the  Chamber  of  Commerce  of 
the  State  of  New- York,  on  the  2d  of  March,  1871,  the  following 
resolution,  offered  by  Mr.  SAMUEL  B.  RUGGLES,  Chairman  of  the 
Committee  on  Telegraphs  and  Postal  Affairs,  was  unanimously 
adopted : 

Resolved,  That  Canals,  Railways  and  Telegraphs  form  part  of 
one  common  system  of  commercial  machinery  for  facilitating  and 
cheapening  the  commerce,  interchanging,  between  nations,  the  varied 
products  of  the  globe,  in  which  any  facility  afforded  to  any  part 
benefits  the  whole ;  and  that  any  needless  imposition  of  tolls,  ex 
penses  or  other  charges  on  any  part  of  that  system,  is  the  fruit  of  a 
policy  unfit  for  the  present  enlightened  age,  and  injurious  to  the 
general  welfare  and  advancing  civilization  of  the  human  race. 


21 


APPENDIX  No.  1. 

LETTER  FROM  ME.  WILLIAM  G.  PECK,  PEOFESSOR  OF  MATHEMATICS, 
&C.,  EEFEERED  TO  IN  THE  PEECEDING  EEPOET. 

COLUMBIA  COLLEGE, 
New- York,  January  21,  1871. 

DEAE  SIB: 

I  have  examined  the  globe,  and  find  that  the  "great  circle," 
through  San  Francisco  and  Yokohama,  passes  considerably  less  than 
200  miles  to  the  southward  of  the  Aleutian  Islands.  This  makes 
the  route  by  these  islands  but  little  longer  than  by  the  great  circle. 
I  find  on  my  globe,  an  island  marked  Belschevinskoi,  that  is  almost 
equi-distant  from  San  Francisco  and  Yokohama.  This  island  is  in 
latitude  52°  and  longitude  170°  W.  By  measurement  on  my  three 
foot  globe,  I  find  the  following  distances,  which  are  not  very  far 
from  true : 

1st.  San  Francisco  to  Yokohama,  great  circle,  4,450  nautical  miles. 
2d.  San  Francisco  to  Belschevinskoi,      "          2,235 
3d.  Belsclievinskoi  to  Yokohama,  "          2,265 


Total, 4,500 

This  gives  but  50  nautical  miles  difference  by  the  two  routes. 
I  am,  sir,  yours  very  truly, 

WM.  G.  PECK. 
Hon.  S.  B.  RUGGLES, 

Chairman  of  Committee  of  Chamber  of  Commerce,  N.  Y. 


22 

APPENDIX  No.  2, 

REFERRED  TO  IN  THE  PRECEDING  REPORT. 


COMMERCE  OF  EUROPEAN  NATIONS  AND  OF  THE  UNITED  STATES 
ON  THE  PACIFIC  AND  INDIAN  OCEANS. 

I.  THE  UNITED  KINGDOM  OF  GREAT  BRITAIN  AND  IRELAND. 


In  1854. 


In  1868. 


Mauritius,  

Exports  to. 
£401,146 
9,620,710 
413,504 

590,418 
478,293 
641,912 

548,823 

354,972 
13,405,986 

Imports  from. 
£1,677,533 
10,672,862 
1,506,646 

794,105 
(Inc.  with  China.) 
214,384 
9,125,040 

652*,i58 

4,301,868 
56,982 

Exports. 
£391,106 
22,253,231 
869,257 

1,571,660 
2,274,024 
871,460 
6,426,010 
1,254,483 
994,199 

12,815,375 
2,074 

Imports. 
£1,061,999 
30,071,866 
3,671,484 

2,050,163 
235,804 
75,290 
11,481,565 
181,222 
1,824,795 

12,571,423 
72,593 

British  India  .  . 

Ceylon,  

Singapore  and  Straits' 
Settlements  . 

Hong  Kong,  

Java  and  Sumatra,  .  .  . 
China,  

Japan,  

Philippine  Islands,  .  .  . 
Australia    and     New- 
Zealand  * 

French  Possessions,  .  . 
Exports  , 

£26,455,764 

£29,001,578     £49,723,079 
29,001,578 

£63,298,254 
49,723,079 

Exports  and  im 

£55,457,342 

$277.286.710 

.... 

£113,021,333 
$565,106,665 

*  The  official  "  Statistics  of  New-Zealand,"  just  received  at  the  Chamber  of 
Commerce,  New- York,  state  its  total 


Exports,        "         

4,224,860 

$46,904,835 
$409,540 
67. 

Imports  from  United  St 
Exports  to               " 

COUNTRIES. 
Madagascar,  

ates  

$345,545 
63,995 

II. 
In 

FRANCE. 
1853. 

In  18 

Exports  to. 
$180,000 

3,500,000 
1,260,000 
260,000 
60,000 

120,000 
1,000,000 

Imports  from. 
$40,000 

4,340,000 
8,240,000 
1,860,000 
380,000 

3,420,000 
340,000 

Exports. 
$120,000 

2,400,000 
3,060,000 
500,000 

260,000 
5,420,000 

Imports. 
$240,000 

5,000,000 
19,180,000 
480,000 
160,000 

1,720,000 
20,800,000 

He  de  la  Reunion,  (for 
merly  Bourbon,)  
British  East  Indies,.  .  . 
Dutch 
Philippine  Islands,  .  .  . 
French         "  etablisse- 
mens"  in  India,  .... 
China,    Cochin   China, 
Japan  and  Oceanica, 

Exports,  

$6,380,000 

$18,620,000 
6,380,000 

$11,760,000 

$47,580,000 
11,760,000 

Exports  and  imports, $25,000,000 


$59,340,000 


23 


III.  THE  UNITED  STATES  OF  AMEEICA. 
In  1853, 


In  1868. 


UOUNTRIES.                         /- 

British  East  Indies,  .  .  . 
Dutch 
Philippine  Islands,  
China                       .    .  . 

Imports  to.     Exports  from.            Exports. 
$556,209       $3,581,726          $647,440 
383,706            384,583            144,263 
65,375         2,465,083              56,202 
3,736,992        10,573,770        11,691,490 
4,287,002               4,848,984 
780,168 
846,673 

737,877              17,371            100,536 
52,724 
3,338               

Imports. 
$7,476,294 
1,903,875 
3,963,684 
11,385,024 
85,125 
2,429,182 
1,189,400 

39,972 
15,849 

Australia   ....   

Japan 

Hawaian  Islands  

South  Sea  Islands  and 
Pacific  generally,  .  .  . 
Asiatic  Russia  

Mauritius,  

Exports,. 


$9,770,499      $17,022,533 
9,770,499 


$19,168,480     $28,488,405 
19,168,480 


Exports  and  imports, $26,793,032 


AGGREGATE  EXPORTS  AND  IMPORTS  OF  THE  THREE  PRECEDING  NATIONS. 


In  1853-4, 

Exports,,...  $161,158,389 
Imports,....  168,921,353 


$330,079,742 


In  1867-8. 

Exports,....  $279,548,875 
Imports,....  392,559,075 


$672,103,650 


In  1867-8. 

IV.  NETHERLANDS Exports  and  imports, 

V.  HAMBURGH  AND  BREMEN,..      "        "        " 

VI.  SPAIN, " 

VII.  SWEDEN  AND  NORWAY, "        "        " 


$51,500,550 

9,328,000 

1,750,000 

460,060 

$735,141,550 


Note. — There  may  also  have  been  a  comparatively  unimportant  amount  of 
commerce  on  the  Pacific  and  Indian  Oceans,  to  and  from  Italy,  Austria  and  Russia, 
not  yet  ascertainable. 


THE    RELATION 


OF  THE  GOVERNMENT 


TO 


THE  TELEGRAPH; 


OR, 


A  REVIEW  OF  THE  Two  PROPOSITIONS  NOW  PENDING  BEFORE  CONGRESS 
FOR  CHANGING  THE  TELEGRAPHIC  SERVICE  OF  THE  COUNTRY. 


DAVID  A.  WELLS, 

Late  U.  S.  Special  Commissioner  of  the  Revenue,  Chairman  of  the  Tax  Commission  of  the  State  of  New  York. 


WITH    APPENDICES. 


NEW  YORK. 

1873. 


EXECUTIVE  OFFICE, 

Uttiott  SM*0owto  (fl 

NEW  YOEK,  September,  1872. 
Hon.  DAVID  A.  WELLS. 

Sir:  The  relation — present  and  prospective — of  the  exist 
ing  telegraphic  system  of  the  United  States  to  the  Federal 
Government,  is  a  subject  which  is  certain,  in  the  future,  to  be 
earnestly  pressed  upon  the  attention  of  both  Congress  and  the 
country;  and,  in  view  thereof,  it  seems  eminently  desirable 
that  there  should  be  presented  to  the  public  a  clear  and 
impartial  statement  of  all  the  more  important  involved  facts 
and  circumstances. 

The  "Western  Union  Telegraph  Company,  fully  recognizing 
your  experience  in  investigating  matters  pertaining  to  the  trade, 
commerce  and  industry  of  the  country,  and  your  method  in  the 
presentation  of  results,  would,  therefore,  request  of  you  the 
preparation  of  such  a  statement ;  and,  also,  as  the  result  of 
careful  investigation,  the  expression  of  an  opinion  respecting  the 
expediency  of  the  two  propositions,  looking  to  a  change  in  the 
character  of  the  telegraphic  service  of  the  country,  now  pending 
before  Congress. 

In  furtherance  of  such  investigation,  all  information  in 
possession  of  the  Western  Union  Company  will  be  placed 
without  reserve  at  your  disposal ;  but,  in  so  doing,  the  Company 
would  disclaim  in.  advance  any  intention  or  desire  to  anticipate 
or  influence  conclusions.  They  ask  nothing  but  what  is  right ; 
they  trust  that  they  shall  not  be  obliged,  through  the  exercise 
of  superior  power  in  the  hands  of  the  Federal  Government,  to 
submit  to  anything  which  is  wrong. 

I  am,  very  respectfully,  etc.,  etc., 

WILLIAM  ORTON,  President 


December,  1872. 
To  Hon.  WILLIAM  ORTON, 

President  Western  Union  Telegraph  Co. 
Sir:  In   accordance   with  your  request,  I  have  made  the 


subject  of  the  proposed  relation  of  the  telegraphic  system  of  the 
United  States  to  the  Federal  Government  a  matter  of  careful 
investigation,  and  herewith  submit  a  statement  of  the  essential 
facts  pertaining  thereto,  with  such  conclusions  as  in  my  judg 
ment  seem  warranted  by  the  combined  facts  and  circumstances : 

PRESENT   CONDITION  OF  THE    TELEGRAPH  SYSTEM  OF  THE 
UNITED  STATES. 

The  telegraph  service  of  the  United  States  is  at  present 
performed  by  an  association  known  as  the  "  Western  Union 
Telegraph  Company " — the  result,  as  the  name  indicates, 
of  the  consolidation  of  most  of  the  telegraph  interest  of  the 
country  existing  prior  to  1866 — and  some  ten  other  and  rival 
companies,  of  much  smaller  capital  and  area  of  geographical 
operation. 

The  more  exact  relations  of  the  "  Western  Union  "  to  the 
other  Telegraphic  Companies  of  the  United  States  may  be  thus- 
indicated : 

On  the  1st  day  of  July,  1872,  the  Western  Union  Company 
controlled  and  operated  62,032  miles  of  line ;  137,190  miles  of 
wire,  and  5,237  officers  or  stations.  Of  this  aggregate  1,212 
miles  of  line  and  2,742  miles  of  wire  were  in  New  Brunswick 
and  Nova  Scotia,  and  512  miles  of  line,  bearing  one  wire,  in 
British  Columbia ;  leaving  60,308  miles  of  line,  and  133,936 
miles  of  wire  in  the  United  States.  The  nominal  capital  of  the 
Western  Union  is  $41,000,000,  and  its  gross  receipts  for  the 
year  ending  June  30,  1872,  were  $8,457,095.77,  derived  from 
the  following  sources : 

From  the  transmission  of  messages, • $7,040,803.53 

"  "  press  reports, 979,083.71 

"  market  "  107,579.72 

"  "  weather  "  137,522.88 

All  other  sources,* 192,105.93 


Total, $8,457,095.77 

The  statistics  of  all  other  and  rival  Telegraph  Companies  in 
the  United  States  were,  for  the  year  1871,  estimated   as  fol- 

*  Premium  on  gold  from  tolls,  accruing  from  cable  business,  commissions  on 
money  transfers,  etc. 


lows:  11,785  miles  of  line  ;  24,340  miles  of  wire;  773  stations  j 
nominal  capital  (estimated)  $16,000,000.  Since  this  date,  how 
ever,  there  has  been  an  increase  in  all  of  these  lines,  b  ut  to  what 
extent  cannot  be  definitely  stated.* 

Aggregate. — For  the  1st  of  January,  1873,  the  telegraphic 
system  of  the  United  States  may  be  thus  approximately  esti 
mated  : 

Aggregate  nominal  capital,  $60,000,000 ;  length  of  lines, 
80,000  miles;  length  of  wire,  180,000  miles;  number  of 
stations,  6,300. 

During  the  year  ending  June  30th,  1872,  there  were  sent 
over  the  wires  of  the  Western  Union  Telegraph  Company, 
exclusive  of  messages  sent  by  and  for  railroad  companies, 
between  stations  on  the  line  of  the  roads,  and  service  messages 
of  the  Telegraph  Company,  10,271,935  full  paid  messages; 
660,203  partially  paid  and  free  messages ;  and  1,512,361  press 
messages  ;f  making  a  total  of  12,444,449. 

RECENT    INCREASE    AND   DEVELOPMENT    OF    THE    TELEGRAPHIC 
SERVICE  OF  THE   UNITED  STATES. 

The  recent  increase  and  development  of  the  telegraph  service 
of  the  United  States,  as  performed  by  the  Western  Union 
Telegraph  Company,  is  shown  by  the  following  statistics: 

*  Of  the  companies  competing  with  the  Western  Union  the  following  are  the 
most  important : 

First.  The  "Pacific and  Atlantic,"  which  had  in  operation,  in  1871,  4,155  miles 
of  line ;  8,280  miles  of  wire,  extending  from  New  York  to  St.  Paul  and  St.  Louis 
by  Chicago,  and  to  New  Orleans  by  Cincinnati  and  Memphis. 

Second.  The  "Atlantic  and  Pacific,"  operating  in  1871,  in  connection  with  the 
telegraph  of  the  Union  Pacific  Railroad,  4,155  miles  of  line,  and  8,220  miles  of 
wire. 

Third.  The  "  Southern  and  Atlantic,"  extending  from  Washington,  along  the 
line  of  the  coast,  to  Montgomery,  Alabama. 

Fourth.  The  "  Franklin,"  extending  from  Washington  to  Boston,  800  milea  of 
line ;  2,780  miles  of  wire. 

Fifth.  The  "  Great  Western,"  with  headquarters  at  Chicago. 

Sixth.  The  "  Philadelphia,  Reading  and  Potts  ville,"  owned  and  operated  by  the 
Philadelphia  and  Reading  Railroad. 

f  The  number  of  press  messages  given  is  an  estimate  obtained  by  dividing  the 
whole  number  of  words  sent  for  the  press  by  thirty,  that  number  being  assumed 
to  be  the  average  number  of  words  embraced  by  ordinary  commercial  and  social 


In  1866,  subsequent  to  the  consolidation  of  the  majority  of 
the  preexisting  Companies,  the  Western  Union  Company  owned 
and  operated  75,686  miles  of  wire  ;  in  1867  the  aggregate  was 
85,291;  in  1868,  97,594;  in  1869,  104,584;  in  1870,  112,- 
191 ;  in  1871,  121,151 ;  in  1872,  137,191,  thus  showing  an 
increase  in  six  years  of  nearly  79  per  cent. 

The  gross  receipts  of  the  Western  Union  Company  from  the 
transaction  of  business  were,  for  the  fiscal  year  ending  June 
30th,  1867,  $6,568,925 ;  1868,  $7,004,560 ;  1869,  $7,316,918  ; 
1870,  $7,138,737;  1871,  $7,637,448;  1872,  $8,457,095. 

The  net  receipts  for  the  same  period,  after  paying  operating 
expenses,  but  including  no  expenditure  for  construction,  or  for 
any  other  purpose  than  the  maintenance  and  operation  of  lines, 
were,  for  1867,  $2,624,919 ;  1868,  $2,641,710  ;  1869,  $2,748,801 ; 
1870;  $2,227,965;  1871,  $2,532,661 ;  1872,  $2,790,232. 

The  increase  of  telegraphic  business  on  the  lines  of  the 
Western  Union  Company  since  1867  is  also  worthy  of  particular 
attention,  as  affording  to  some  extent  a  gauge  or  standard  for 
estimating  the  contemporaneous  commercial  and  industrial 
activity  of  the  country.  Thus,  from  1867  to  1868,  the  in 
crease,  measured  in  per  cents.,  was  8*9  per  cent. ;  from  1868 
to  1869,  23-8  per  cent. ;  1869  to  1870,  154  per  cent. ;  1870 
to  1871,  16-2  per  cent.;  1871  to  1872,  16^  percent. 

Such  being  in  brief  the  actual  condition  of  the  telegraphic 
system  of  the  country,  two  propositions,  each  looking  to  a 
radical  change  in  the  character  of  its  service,  are  now  being 
pressed  upon  the  attention  of  Congress  and  the  public,  and 
their  acceptance  eagerly  sought  for  by  their  respective 
advocates. 

THE   GOVERNMENT  PROPOSITION. 

The  first  of  these,  originally  brought  forward  by  Hon.  C. 
C.  Washburn,  of  Wisconsin,  in  1869,  presented  to  Congress, 
in  the  form  of  a  bill,  in  1870,  and  subsequently  endorsed  by  the 
Postmaster-General  and  the  President  of  the  United  States  in 
his  annual  Message,  December,  1871,  proposes  that  the  Federal 
Government  shall  take  possession  and  own  the  entire  telegraph 
system  of  this  country,  incorporate  it  with  or  make  it  an  adjunct 
of  the  existing  postal  system,  and  place  the  whole  business  of 
transmitting  and  delivering  messages,  and  of  constructing  and 
operating  lines,  exclusively  under  the  control  of  the  Post-office 


Department.  The  right  to  enter  into  such  possession,  apart 
from  the  right  of  "  eminent  domain,"  unquestionably  vests  in 
the  United  States,  in  virtue  of  an  Act  of  Congress  passed  in 
1866,  and  subsequently  accepted  by  the  Western  Union  and 
other  Telegraph  Companies,  which  provides  that  all  Telegraphic 
Companies  then  in  existence,  or  which  shall  be  thereafter  incor 
porated  under  State  laws,  may  have  the  privilege  of  constructing 
and  maintaining  lines  over  the  public  domain,  over  and  along 
any  military  or  post  roads,  and  across  navigable  streams  or 
waters,  with  the  right  to  take  from  the  public  lands  all  necessary 
building  materials,  and  to  preempt  and  use  such  portions  of  the 
unoccupied  public  lands,  not  exceeding  forty  acres  to  every 
fifteen  miles  of  line,  subject  to  the  following  conditions :  1st. 
Priority  in  respect  to  the  use  of  the  lines  by  the  Government  and 
its  agents,  at  rates  of  compensation  to  be  determined  by  the 
Postmaster-General.  2d.  That  the  United  States  may,  at  any 
time  after  the  expiration  of  five  years  from  the  passage  of  the 
Act,  purchase  all  the  lines,  property  and  effects  of  the  several 
companies  at  appraisement.  3d.  That  no  company  shall  avail 
themselves  of  the  privileges  conferred  by  the  Act  until  after  a 
written  acceptation  of  its  obligations  and  restrictions. 

The  bill  reported  to  Congress  in  1870  by  Hon.  C.  C. 
Washburn,  the  Chairman  of  a  Select  Committee  of  the  House  on 
the  telegraph,  and  which  (with  one  exception,  to  be  hereafter 
noted)  is  understood  to  represent  the  present  proposed  scheme 
of  Government  absorption  of  the  telegraph,  provides  essentially 
as  follows : 

First.  That  on  and  after  a  time  specified  the  business  of 
transmitting  telegraph  messages  in  the  United  States  shall  vest 
exclusively  in  the  Government,  and  that  any  person  or  company 
who  shall  transmit  or  receive  any  telegraphic  message,  device,  or 
information,  except  as  authorized  and  permitted  by  the  Post 
master-General,  shall  be  liable  for  each  such  offence  to  a  penalty 
not  exceeding  one  hundred  dollars. 

Second.  That  the  United  States  shall  purchase  by  appraise 
ment  the  telegraph  lines,  property  and  effects  of  all  existing 
Companies. 

Third.  The  tariff  on  all  messages  shall  be  fixed  at  a  uniform 


8 

rate,  irrespective  of  distance,  of  twenty-five  cents  for  each 
twenty-five  words,  including  date,  address  and  signature,  and 
of  one  cent  .for  each  additional  word  ;  the  rates  to  be  prepaid  by 
stamps  affixed  to  each  message  by  the  sender. 

Other  sections  of  the  bill  provide  for  the  creation  of  a 
Telegraphic  Bureau  in  the  Post-office  Department ;  the  appoint 
ment  of  a  "  Director-General,"  at  a  salary  of  $6,000  per  annum, 
and  such  other  assistants  and  clerks  as  may  be  found  necessary ; 
the  extension  of  the  telegraph  to  every  post-office  in  the  United 
States,  the  annual  gross  receipts  of  which  for  postage  are  not  less 
than  one  hundred  dollars ;  the  authorization  of  special  service 
for  the  newspaper  press ;  the  negotiation  of  contracts  with 
foreign  companies  for  the  interchange  of  international  messages ; 
and,  finally,  with  a  view  of  securing  for  the  Government  the  aid 
of  efficient  and  intelligent  employe's,  that  no  removals  shall  be 
made  from  offices  created  by  the  Act  except  for  satisfactory  and 
sufficient  cause,  and  that  all  promotions  shall  be  regular  from 
the  grades  next  subordinate. 

THE  SECOND   OR   "  HUBBARD  "  PROPOSITION. 

The  second  proposition  in  respect  to  the  future  of  the  tele 
graph  in  the  United  States,  which  has  been  brought  before 
Congress  and  the  country,  is  best  known  as  the  "Hubbard" 
proposition,  from  the  circumstance  of  its  origination  and  special 
advocacy  by  Gardiner  G.  Hubbard,  Esq.,  of  Boston,  and  has 
its  most  recent  embodiment  in  a  bill  reported  to  Congress 
by  the  House  Committee  on  Appropriations,  December,  1872, 
entitled  "A  Bill  to  connect  the  Telegraph  with  the  Postal 
Service,  and  to  Reduce  the  Rates  of  Correspondence  by 
Telegraph"  This  proposition,  it  is  to  be  observed  in 
the  outset,  is  not  like  the  first — a  purely  Government  enterprise, 
in  which  the  telegraph  is  to  be  managed  exclusively  by  the 
Post-office  Department;  but,  on  the  contrary,  proposes  the 
incorporation  of  a  private  Company,  which,  in  consideration  of 
certain  special  and  extraordinary  privileges,  to  be  granted  by 
the  Government,  agrees  to  contract  with  the  Post-office 

*NOTE.— In  his  report  for  December,  1872,  the  Postmaster-General  proposes  that 
the  tariff  on  all  messages  transmitted  by  the  Government  shall  bo  at  the  outset  at 
an  average  of  thirty-three  cents  for  each  twenty -five  words  throughout  the  United 
States,  to  be  reduced,  after  a  "thorough  renovation  of  the  lines,  to  an  average  of 
thirty  cents." 


9 

Department  for  the  transaction  of  the  telegraphic  business  of  the 
country  at  certain  specific  rates,  claimed  to  be  more  favorable 
than  those  now  existing.  In  other  respects,  the  essential 
features  of  this  second  proposition  (as  reported  to  Congress  prior 
to  the  present  session)  are  as  follows  : 

First.  The  Postmaster-General  is  required  to  contract  with  the 
Company  authorized  by  the  Act,  for  a  period  of  ten  years,  for 
the  transmission  only  (not  reception  or  delivery)  of  telegraphic 
messages,  at  a  rate  which  shall  not  exceed  twenty -five  cents  for 
a  circuit  of  two  hundred  and  fifty  miles,  fifty  cents  for  a  circuit 
of  five  hundred  miles,  and  twenty -five  cents  for  every  added 
circuit  of  five  hundred  miles,  for  each  twenty  words  or  figures, 
including  date,  address,  and  signature  ;  the  rates,  in  all  cases,  to 
be  prepaid  by  stamps.  The  right  to  charge  extra  rates  for 
messages,  the  senders  of  which  are  willing  to  pay  for  "priority 
of  transmission"  or,  in  plain  English,  the  right  to  put  one 
message  ahead  of  another  for  a  consideration,  is  also  expressly 
stipulated  and  provided  for. 

Second.  The  Postal  Telegraph  Company  shall  provide  lines  of 
telegraph  to  every  city  and  village  where  telegraph  stations  are 
now  maintained,  and  to  all  other  places  which  may  have  a 
population  of  three  thousand,  and  to  the  capital  of  every  State. 
The  United  States,  on  the  other  hand,  are  obligated  to  furnish 
suitable  and  convenient  accommodations  at  each  postal  station  for 
all  officers  and  instrumentalities  required  by  the-company  for  the 
transaction  of  its  business,  including,  by  specification  or  legiti 
mate  inference,  fuel,  lights,  clerical  service,  stamps  and  station 
ery  ;  and  shall  also  assume  the  expense,  responsibility  and 
business  of  receiving  messages,  and  also  of  delivering  by  mes 
sengers  or  mail  all  such  as  by  the  wires  may  have  been 
transmitted. 

Third.  The  compensation  to  be  paid  to  the  Company  by  the 
Government  shall  not  exceed  ten  per  cent,  per  annum  on  its 
authorized  stock  capital,  over  and  above  all  operating  expenses ; 
and  in  case  the  receipts  for  the  transmission  of  messages  are  in 
excess  of  the  requirements  for  such  payments,  the  rates  for  the 
transmission  of  messages  shall  be  reduced  proportionally.  And 
in  case  the  Company  is  assessed  for  any  tax  or  license  in  any 


10 

State  or  Territory,  the  Postmaster-General  may  increase  the 
rates  on  each  telegram  between  the  offices  in  such  State  or 
Territory  "  until  the  increased  amount  equals  such  tax  or  li 
cense." 

Fourth.  The  Postal  Telegraph  Company  shall  have  power  to 
make  special  contracts  with  railway  companies  relative  to 
railway  service,  and  with  the  press  for  the  transmission  of  news  ; 
the  rates  for  which  latter  class  of  despatches  shall  not  exceed 
those  paid  by  existing  "press  associations  "  for  similar  service. 

Fifth.  The  capital  stock  of  the  Postal  Telegraph  Company 
shall,  at  its  organization,  consist  of  10,000  shares,  of  the  par 
value  of  $100  each— total  $1,000,000— to  represent  "the 
expenses  of  organization  and  connection  of  its  lines  with  postal 
telegraph  offices ;"  and,  in  addition,  the  Company  may  from 
time  to  time  issue  new  stock,  to  represent  the  actual  cost  of  lines 
that  may  be  purchased  or  constructed. 

Sixth.  The  Postmaster-General  may,  at  any  time  after  the 
expiration  of  five  years,  purchase  the  property  and  franchise  of 
the  Company,  either  by  agreement  or  appraisement,  or  "  upon 
paying  to  the  Company  the  actual  cost,  together  with  interest 
thereon  at  the  rate  of  ten  per  cent,  per  annum,  deducting  there 
from  the  full  amount  of  any  moneys  paid  to  the  stockholders 
for  or  on  account  of  dividends,  interest,  or  earnings." 

REASONS    WHY    A     CHANGE    IN    THE     EXISTING     SYSTEM-   IS 
ADVOCATED. 

Having  thus  given  the  essential  features,  as  expressed  in  the 
form  of  bills  reported  to  Congress,  of  the  two  propositions 
which  look  to  an  entire  change  in  the  existing  telegraphic 
system  of  the  country,  the  question  which  next  naturally 
suggests  itself  is — why  is  any  change  to  be  regarded  as 
expedient  ? 

On  the  part  of  those  who  advocate  the  exclusive  possession 
and  operation  of  the  telegraph  by  the  Government,  it  is  said  in 
general  "  that  the  post-office  and  telegraph  have  but  one  and 
the  same  object,  and  that  it  is  for  the  interest  of  the  people  that 
their  management  should  be  in  one  and  the  same  hands."  The 
example  of  Europe  is  also  appealed  to  in  support  of  this  theory, 


11 

in  every  State  of  which,  with  the  exception  of  Great  Britain, 
the  telegraph  has,  almost  from  the  outset,  been  a  Government 
monopoly,  and  in  Great  Britain  itself  has  also  recently  become 
so  through  the  sanction  of  Parliament,  and  the  compulsory  sale 
to  the  Government  of  the  property  and  franchises  of  all  privately 
organized  and  preexisting  companies.  Other  reasons,  regarded 
perhaps  as  even  more  immediate  and  important,  and  semi 
officially  put  forth  by  the  Government  through  its  advocates,* 
are :  that  "  the  press  demands  a  reduction  of  tariff  for  its 
news  reports,  and  a  relief  from  the  combined  monopoly 
of  the  telegraph  and  '  associated  press  ;'  "  "  that  the  interests 
of  the  Government  demand  the  entire  control  of  the  wires 
for  the  proper  transmission  of  the  weather  reports,  and  other 
public  business ;"  and,  finally,  "  that  the  interests  .qf  the  people 
demand  the  extension  of  facilities,  impartiality  in  the  trans 
mission  of  dispatches,  and  the  reduction  of  tariffs  to  the  mini 
mum  consistent  with  profitable  working." 

On  the  other  hand,  the  sum  and  substance  of  the  reasons  put 
forth  in  support  of  the  so-called  "  Postal  Telegraph,"  by  Mr. 
Hubbard  and  his  associates,  may  be  concisely  stated  as  follows  : 

Protesting,  in  the  first  instance,  against  an  exclusive  posses 
sion  and  control  of  the  telegraph  by  the  Government,  as  a 
measure  wholly  "opposed  to  our  institutions,"  but  "in  har 
mony  with  the  principles  of  arbitrary  and  monarchical  Govern 
ments,"  they,  nevertheless,  take  the  position  that  a  partial 
ownership  and  interference  by  the  State  would,  on  the  contrary, 
be  both  wise  and  beneficial.  Professing  further  a  deep  interest 
in  the  public  welfare,  and  profoundly  impressed  with  the 
necessity  that  the  people  should  enjoy  greater  and  cheaper 
telegraphic  facilities  than  they  now  do,  Mr.  Hubbard  and  his 
friends  claim  that  this  latter  result  can  only  be  attained  through 
a  cooperative  union  and  partnership  of  the  Post-office  Depart 
ment  on  the  one  hand  and  the  Postal  Telegraph  Company  on 
the  other,  according  to  the  manner  and  conditions  specified  in 
the  abstract  of  the  bill  before  noticed. 

Such,  then,  in  brief,  are  the  reasons  put  forth  to  the  public 
in  support  of  the  general  theory  that  a  change  in  the  existing 
telegraphic  system  of  the  country  is  immediately  expedient. 

*  See  speech  of  R.  B.  Lines  before  the  House  Committee  on  Appropriations, 
April,  1871. 


12 

The  test  and  analysis  of  the  validity  of  these  reasons  comes 
next  in  the  order  of  this  investigation,  but  before  doing  so  it 
seems  desirable  to  present  a  clear  statement  of  the  manner  in 
which  the  telegraphic  service  of  the  United  States  has  been  and 
is  now  executed. 

THE  TELEGRAPH  IN  THE   UNITED  STATES — PAST  AND  PRESENT. 

It  is  curious  to  note  that,  at  the  inception  of  the  telegraph,  the 
whole  subject  was  regarded  by  Congress  as  one  hardly  worthy 
of  its  serious  consideration,  and  that  when  it  was  proposed 
in  the  House  of  Eepresentatives  that  an  appropriation  of 
$30,000  should  be  made  by  the  Government  to  test  and  promote 
the  invention,  an  amendment  that  one  half  the  sum  asked  for 
should  be  devoted  to  experiments  in  mesmerism  was  declared 
by  the  presiding  officer  to  be  wholly  germain  to  the  subject. 
Subsequently,  when  the  first  line  had  been  constructed,  and  the 
practicability  of  transmitting  messages  demonstrated,  a  bona  fide 
proposition  by  Professor  Morse  that  the  G-overnment  should 
purchase  the  whole  invention  for  the  sum  of  $100,000,  was 
unceremoniously  rejected  ;  the  Postmaster-General,  Hon.  Cave 
Johnston,  to  whom  the  proposition  was  referred,  reporting 
as  follows :  "  That  the  operation  of  the  telegraph  between  Wash 
ington  and  Baltimore  had  not  satisfied  him  that  under  any 
rate  of  postage  that  could  be  adopted  its  revenues  could  be  made 
equal  to  its  expenditure"  And  when,  more  than  twenty  years 
afterwards,  a  proposal  was  made  to  Congress  to  unite  the  postal 
and  telegraphic  systems,  Hon.  William  Dennison,  the  then 
Postmaster-General,  as  the  result  of  a  careful  investigation, 
submitted  a  report,  of  which  the  following  is  the  concluding 
paragraph  :  "  As  the  result  of  my  investigation,  under  the  resolu 
tion  of  the  Senate,  I  am  of  opinion  that  it  will  not  be  wise  for  the 
Government  to  inaugurate  the  proposed  system  of  telegraph  as  a 
part  of  the  postal  service,  not  only  because  of  its  doubtful  financial 
success,  but  also  its  questionable  feasibility  under  our  political  sys 
tem? 

Thus  formally  and  decisively  neglected  by  the  Government, 
at  a  time  when  help  and  supervision,  if  ever  to  be  given,  was 
most  needed,  the  enterprise  of  telegraphic  communication  in  the 
United  States,  with  all  its  risks  and  then  unforeseen  contin- 


13 

gencies,  was  taken  up  by  individuals,  and,  through,  the  personal 
energy  and  private  capital  of  comparatively  few  men,  has  been 
expanded  to  dimensions  which  find  no  parallel  in  the  experience 
of  any  other  one  nation,  and  are  surpassed  only  by  the  aggre 
gate  constructions  of  all  the  States  of  Europe. 

In  the  outset  the  telegraphic  service  of  the  United  States 
was  performed  by  a  very  considerable  number  of  companies, 
which  were  gradually  organized  under  charters  granted  by  the 
several  States ;  but  by  1866  most  of  the  competing  and  connect 
ing  lines  had  become  consolidated  under  the  one  charter  of 
the  Western  Union  Company.  Since  1866  eight  other  rival 
companies  have  been  organized,  the  lines  of  one  of  which 
stretch  across  the  continent.  Congress,  on  the  other  hand, 
except  to  authorize  the  building  of  lines  across  the  public 
domain,  whereby. Government  communication  with  the  Pacific 
Coast  and  the  various  military  stations  of  remote  territories 
might  be  facilitated,  has  hitherto  steadily  declined  to  pass  any 
acts  of  incorporation,  or  to  legislate  in  favor  of  any  one  Company 
as  distinct  from  the  rest,  and  has  thus,  to  all  intents  and 
purposes,  distinctly  recognized  the  policy  of  leaving  the 
creation  and  control  of  telegraphic  companies  exclusively  to 
the  States. 

Any  review  of  the  experience  of  the  telegraph  in  the  United 
States  would,  furthermore,  be  imperfect,  which  omitted  to  call 
attention  to  the  circumstances  that,  while  the  railroad  system  of 
the  country  has  grown  up  under  the  stimulus  of  grants  by 
Congress  of  money  and  of  millions  of  acres  of  its  public  lands, 
superadded  to  subscriptions,  bounties  and  exemptions  innumer 
able  from  States,  counties  and  municipalities,  the  telegraph  has 
given  rather  than  received  favors  from  the  public.  For  if  we 
add  to  the  trifling  donation  made  by  Congress  in  the  outset 
to  Professor  Morse,  the  highest  estimated  money  value  of  all 
the  privileges  since  granted  by  the  Government  to  all  the 
Telegraph  Companies,  namely — the  right  to  string  wires  along 
military  and  post  roads,  to  cross  the  wilderness  of  the  plains,  to 
preempt  land  for  actual  occupation* — a  right  granted  to  every 
citizen — it  is  capable  of  direct  proof  that,  through  work  per 
formed  for  the  Government  and  never  paid  for,  and  through 
services  rendered  to  the  public  in  time  of  war,  flood,  pestilence 

*  Hot  an  acre  has  been  preempted. 


14 

and  conflagration,  to  the  coast  surrey  and  science  generally, 
for  all  of  which  payment  was  never  asked  or  expected,  the 
Western  Union  Telegraph  Company  alone  has  made  to  both 
Government  and  the  public  a  compensation  which,  to  say  the 
least,  has  been  in  the  nature  of  a  fourfold  equivalent. 

TAXATION  OF  THE  TELEGRAPH  IN  THE   UNITED  STATES. 

Again,  while  in  all  other  countries  the  capital,  franchise  and 
business  of  the  telegraph  has  been  carefully  exempted  from  tax- 
tion,  in  the  United  States,  on  the  other  hand,  a  rule  of  an  ex 
actly  opposite  character  has  been  recognized.  Thus,  from  1865 
to  1871  the  several  Telegraph  Companies  of  the  United  States 
paid  directly  to  the  Federal  Government,  in  the  form  of  internal 
revenue  taxes,  an  aggregate  of  $1,549,000 ;  and  this,  too,  in 
addition  to  onerous  State  and  local  taxes,  and  a  system  of 
national  customs  taxes  on  materials  of  construction  and  opera 
tion,  which  last,  in  the  case  of  wire  alone — the  leading  article  of 
telegraphic  consumption — enhances  its  cost  sixty -two  per  cent,  (on 
a  gold  basis)  beyond  what  is  paid  for  identically  the  same  article  in 
either  Great  Britain,  Belgium,  Switzerland  or  Holland.*  And, 
although  at  the  present  time  the  national  internal  revenue  taxes 
on  the  receipts  of  Telegraph  Companies  have  been  repealed,  the 
aggregate  of  localf  and  customs  taxes  yet  enforced  are,  in  the 
case  of  the  Western  Union  Company,  equivalent  to  ten  per  cent, 
onfall  one  ninth  of  its  total  annual  gross  receipts  for  the  trans 
action  of  business.  And  yet  we  find  the  Federal  Government, 
which  in  part  upholds  and  j  ustifies  the  continuance  of  such  tax 
ation,  assuming  through  its  representative  the  position  of  a  com 
plainant,  and  virtually  saying  to  the  several  companies,  "  Be 
cause  you  do  not  transact  your  business  cheaper  we  ought  to 
deprive  you  of  the  privilege  of  doing  business  at  all." 

DEVELOPMENT  SINCE   1866. 

Since  the  final  consolidation  of  1866  the  telegraph  facilities 

*  If  we  include  premium  on  gold,  freights,  commissions,  &c.,  the  cost  of  wire 
in  New  York  is  at  least  double  the  price  for  the  same  article  in  England. 

f  In  some  instances  the  Western  Union  pays  a  tax  as  high  as  one  thousand 
dollars  for  the  privilege  of  doing  business  within  the  precincts  of  a  single  munici 
pality. 


15 

of  the  United  States  have  been  increased  by  the  construction  of 
more  than  30,000  miles  of  additional  line,  75,000  miles  of  wire, 
and  by  the  opening  of  more  than  3,000  new  stations,  at  which 
messages  can  be  transmitted  and  delivered.  The  expenditure 
rendered  necessary  for  this  developement  has  been  about  twelve 
millions  of  dollars,  of  which  the  Western  Union  Company  has 
paid  about  fi ve  millions,  in  addition  to  the  contributions  of  rail 
way  companies  included  in  its  system,  which  amount  to  about 
two  and  a  half  millions — the  increase  during  the  year  ending 
June  30,  1872,  under  the  auspices  of  the  Western  Union  alone, 
having  been  6,000  miles  of  line,  16,039  miles  of  wire  and  631 
offices. 


REDUCTION  OF  EATES. 


During  the  time  referred  to,  moreover,  not  a  single  year  has 
elapsed  in  which  there  has  not  been  a  marked  reduction  of  rates ; 
so  that  at  the  present  time  the  average  sum  charged  for  the 
transmission  of  messages  is  not  in  excess  of  one  half  that  re 
quired  in  1866  for  the  performance  of  similar  service. 

The  assertion  made  by  the  Postmaster-General  in  his  recent 
report,  that  the  average  receipt  per  message  of  the  Western 
Union  Company  "  has  been  increased  eleven  cents,  or  nearly  20 
per  cent,  since  1867,  notwithstanding  the  undoubted  reductions 
of  tariff  between  important  points,"  although  finding  some  war 
rant  in  the  publication  of  imperfect  data  in  1869,  is  never 
theless  entirely  incorrect  and  deceptive — the  average  annual 
tariff  on  all  messages,  excluding  press  and  market  reports,  and 
all  railway  and  company  service  since  1868,  having  been  as 
follows : 

1869,  $0.92  ;  1870,  $0.77  ;  1871,  $0.73  ;  1872,  $0.62.* 

As  a  contribution  to  economic  science,  it  may  be  further  stated 
that  the  average  charge  at  which  telegraphic  messages  are  now 
transmitted  in  the  United  States  for  the  public  is  less  than  the 

*  The  statistics  published  during  the  years  immediately  succeeding  the  con 
solidation  of  the  various  lines  in  1866,  and  used  in  all  the  earlier  discussions  res 
pecting  the  working  of  the  telegraph  in  the  United  States,  are  now  known  to  have 
been  exceedingly  imperfect — necessarily  so  through  lack  of  an  organization  like 
that  now  existing,  which  has  required  years  to  perfect  and  develop.  The  ave 
rages  above  given — the  result  of  the  most  recent  and  careful  investigation — are 
believed  to  be  as  accurate  as  it  is  possible  to  state  them. 


16 

average  cost  for  doing  equivalent  work  in  1866,  although  since 
that  period  there  has  been  a  marked  advance  in  the  wages  of 
employes  in  almost  every  department  of  service,  and  a  very 
great  increase  in  the  cost  of  wire,  telegraphic  poles  and  some 
other  materials.  Thus,  for  example,  it  costs  more  at  the  present 
time  to  transport  telegraphic  poles  from  the  upper  lakes  to 
Chicago  than  it  cost  four  years  ago  for  the  poles  delivered  at 
Chicago.  The  size  and  weight,  and  consequently  the  cost,  of 
the  great  portion  of  the  wire  now  used  for  telegraphic  construc 
tion  is  also  considerably  greater,  on  a  gold  basis,  than  it  was  in 
1866  and  the  years  anterior. 

Attention  is  also  asked  to  the  fact  that,  in  nearly  every  in 
stance  in  which  the  Western  Union  Company  has  made  a  reduc 
tion  of  rates,  it  has  been  done  with  a  full  knowledge  of  the  fact 
that  such  a  reduction  would  be  accompanied  by  an  absolute  de 
crease  of  net  revenue.  Thus,  when,  in  1869,  the  present  system 
was  adopted  of  estimating  telegraphic  distances  by  an  "  air  line," 
rather  than  by  the  route  actually  traversed,  resulting  in  an  average 
reduction  of  all  rates  of  about  15  per  cent.,  the  loss  in  net  earn 
ings  during  the  succeeding  seven  months  was  $419,295 ;  and 
again,  when,  in  1870,  in  addition  to  other  reductions,  a  system 
was  adopted  of  allowing  messages  to  be  sent  at  night  on  all  lines 
in  the  United  States  and  Canada  east  of  Omaha,  at  rates  one 
half  less  than  those  charged  by  day,  the  net  receipts  of  the  Com 
pany  declined  in  the  succeeding  twelve  months  from  $2,748,801 
to  $2,227,965,  thus  entailing  a  loss  in  a  single  year  of  over  a 
half  a  million  of  dollars.  That  such  reductions  are  likely  to 
prove  ultimately  advantageous  to  the  Company,  as  well  as  to  the 
public,  is  not  to  be  disputed;  but  the  fact  that  the  Western 
Union  Company  have  been  willing,  deliberately,  and  in  repeated 
instances,  to  submit  to  a  very  large  and  immediate  loss,  with  the 
expectation  of  future  gain,  through  an  increased  use  of  the  tele 
graph  by  the  people,  consequent  upon  reduced  charges,  shows 
an  amount  of  practical  wisdom  in  dealing  with  the  public  in 
terests,  strikingly  in  contrast  with  the  reluctant  slowness  with 
which  those  intrusted  with  the  government  of  the  United  States 
have  met  every  proposition  for  the  reduction  of  taxes,  which 
only  the  exigencies  of  an  active  war  could  furnish  an  argument 
for  continuance.  The  further  circumstance  should  almost  be 
overlooked,  that  in  the  memorial  addressed  to  the  Senate  of  the 

1 


17 

United  States,  under  date  of  February,  1872,  the  Western  Union 
Company  state  that  work  has  been  in  progress  for  some  time  by 
this  Company  preparatory  to  a  reduction  of  rates,  additional  to 
those  already  effected. 


TELEGRAPH  STOCK  AS  AN  INVESTMENT. 

As  a  further  contribution  to  the  recent  history  of  the  American 
telegraph,  it  should  be  stated  that,  during  the  period  of  develop 
ment  under  consideration,  or  from  1866  to  1872,  the  amount  paid 
in  dividends  to  stockholders  in  the  telegraph  companies  of  the 
United  States  has  been  about  five  millions,  or  less  than  ten  per 
cent,  on  their  present  aggregate  stock  capital,  estimated  at  $60,- 
000,000.  If  it  be  said  that  the  actual  value  of  the  franchises  and 
property  of  the  several  companies  is  less  than  the  par  value  of  their 
stock,  attention  is  asked  to  the  circumstance  that  the  Government 
of  Great  Britain,  three  years  ago,  paid  more  than  thirty-seven 
millions  in  gold  for  a  system  of  telegraphs  in  that  country,  operat 
ing  29,740  miles  of  line,  and  2,000  offices,  as  compared  with  a 
pr^i^nt  aggregate  in  the  United  States  of  80,000  miles  of  line 
and  (>,300  offices.  One  million  of  dollars  per  annum  again  would 
be  ten  per. cent. — the  rate  contemplated  in  Mr.  Hubbard's  bill — 
on  ten  millions  of  capital ;  but  this  is  less  by  two  millions  than 
the  sum  actually  expended  by  the  telegraph  companies  of  the 
United  States,  independently  of  or  in  connection  with  railroads, 
during  the  last  six  years,  for  improvements  and  construction. 
And  if  it  be  replied  to  this,  also,  that  the  amount  derived  from 
receipts  and  expended  in  improvements  and  construction  repre 
sents  profits  equally  with  the  dividends  paid  directly  to  the 
stockholders,  it  is  a  good  and  sufficient  answer  that,  if  it  be  so, 
it  is  profit  that  up  to  the  present  time  has  accrued  wholly  to  the 
public  and  not  to  the  stockholders,  and  that  for  an  indefinite  fu 
ture  a  large  annual  expenditure  for  similar  purposes  will  be  ab 
solutely  indispensible  to  meet  the  demands  of  an  increasing 
population  and  new  areas  of  territorial  occupation.  That  the 
companies  have  been  willing  to  exercise  this  forbearance  of  any 
immediate  returns  from  their  investments  through  an  expecta 
tion  of  large  future  gains,  as  the  country  increases  in  wealth  and 
population,  may  be  regarded  as  a  correct  assumption ;  but  the 


18 

fact  that  this  is  so,  would  certainly  seem  to  constitute  in  itself  a 
valid  bar  to  any  immediate  demand  for  a  change  on  the  part  of 
a  public  which,  for  the  present  at  least,  is  profiting  exclusively 
from  such  forbearance.  But  be  this  as  it  may,  it  is  a  matter  of 
certainty  that  the  capital  invested  in  telegraphs  in  the  United 
States  is  not  now,  and  for  the  last  six  years  has  not  been,  in  the 
receipt  of  adequate  compensation ;  that  any  profit  under  the 
Government  scheme  will  be  impossible ;  and  under  the  Hub- 
bard  bill,  except  at  the  expense  of  the  Government,  a  matter 
exceedingly  problematical. 

As  a  further  illustration  of  this  position,  take  the  financial  ex 
hibit  of  the  "Western  Union  Telegraph  Company  for  the  year 
ending  June  30,  1872.  Gross  receipts,  $8,457,095.77  ;  total  ex 
penditures,  $5,666,863.16;  apparent  net  profit,  $2,790,232,  or 
6T8irper  cent,  on  a  capital  of  $41,000,000,  or  9^  per  cent,  on  a  cap 
ital  of  $30,000,000.  But  out  of  this  net  gain  or  profit  the  company 
constructed  or  purchased  over  16,000  miles  of  wire  additional, 
all  of  which  was  nearly  as  essential  to  the  accommodation  of  the 
business  and  social  interests  of  the  country,  as  was  the  expendi 
ture  (not  included  in  the  surplus)  of  $930,000  during  the  same 
time  for  the  maintenance  and  repair  of  lines  previously  existing. 
That  the  stockholders  in  the  Western  Union  and  other  telegraph 
companies  may  receive  something  better  in  the  future  is  certainly 
to  be  hoped ;  for  if  they  do  not  the  public  may  feel  assured  that 
either  the  average  of  existing  tolls  will  have  to  be  advanced,  or 
no  more  lines  will  be  built  by  private  capitalists  looking  to 
an  average  rate  of  interest  on  investment. 


^ELEGRAPH  FACILITIES  IN    EUROPE  AND  THE   UNITED  STATES. 

As  has  been  already  stated,  the  telegraph  service  of  Europe, 
with  the  exception  of  the  various  submarine  lines,  has 
from  the  outset  been  mainly  under  the  ownership  and 
control  of  Government.  On  the  contrary,  in  the  United 
States  the  construction  and  operation  of  the  telegraph 
has  been  left  exclusively  to  private  enterprise.  Under  such 
different  circumstances  of  development  the  comparative  results 
have  been  as  follows :  In  Europe,  with  a  population  approximat 
ing  300,000,000,  the  telegraph  system  in  1871  embraced  175,490 
miles  of  line,  474,000  miles  of  wire,  and  15,500  offices. 


19 

In  the  United  States,  with  a  population  which  may  be  esti 
mated  at  40,000,000,  there  are  about  80,000  miles  of  line,  180,000 
miles  of  wire,  and  6,300  offices. 

The  ratio  of  telegraphic  facilities  to  the  population  in  Europe 
and  the  United  States  may  therefore  be  approximately  indicated 
as  follows : 

EUROPE.  UNITED  STATES 

Number  of  inhabitants  to  each  mile  of  line 1,708  500 

"                            "     wire 631  222 

"        office 19,351  6,365 

"        messages  sent 9  3 

It  will  thus  be  seen  that,  as  regards  the  facilities  for  telegraphic 
communication  furnished  in  Europe  and  the  United  States,  the 
latter  are  very  far  in  advance  of  the  former. 

COMPARATIVE  RATES  OF  CHARGES   IN  EUROPE   AND  THE 
UNITED  STATES. 

The  average  charges  for  the  transmission  of  messages  in  Europe 
and  the  United  States  also  constitutes  an  important  element  in 
any  comparison  that  may  be  instituted  in  respect  to  the  relative 
merits  of  the  two  systems.  On  this  point  we  quote  the  testimony 
of  George  B.  Prescott,  Esq.,  the  best  recognized  authority  on 
telegraphic  statistics  in  the  United  States.  He  says  :  "The  tolls 
for  the  transmission  of  messages  are  not  the  same  in  any  two 
countries  in  Europe;  nor  are  they  uniform  for  all  classes  of  mes 
sages  in  any  one  country.  Telegraphic  correspondence  in  Eu 
rope  is  divided  into  two  general  classes,  called  '  internal '  and 
'  international '  messages.  The  internal  are  those  which  are  re 
ceived,  transmitted  and  delivered  in  the  same  country  ;  the  in 
ternational  are  those  which  are  received  in  one  country  and  trans- 
mitted  into  another  country.  •'As  a  general  rule  a  low  rate  of 
charges  is  adopted  for  the  transmission  of  '  internal '  messages, 
while  a  high  tariff  is  imposed  on  'international '  messages.  The 
telegraphic  tolls  in  continental  Europe  in  1869  averaged  36f 
cents  for  internal  messages,  and  $1.01  for  international  messages, 
which  is  a  higher  average  charge  than  is  imposed  in  this  country, 
although  it  is  well  known  that  skilled  labor  is  much  more  ex- 
pensive  here  than  in  Europe." 

It  would  seem  as  if  an  exhibit  of  such  a  character  as  above 


20 

given  would  prove  reasonably  satisfactory  to  the  public,  and  be 
also  regarded  by  them  as  embodying  so  much  of  promise  for  the 
future  as  to  warrant,  at  least  for  the  present,  a  general  opposi 
tion  to  any  radical  and  sweeping  interference  with  the  existing 
system.  That  the  public,  furthermore,  are  either  not  dissatisfied 
with  the  manner  in  which  the  telegraphic  service  of  the  country 
has  been  performed,  or  take  but  comparatively  little  interest  in 
the  subject,  is  sufficiently  shown  by  the  circumstance  that  up  to 
the  present  time  not  a  single  memorial  or  petition  has  been 
presented  to  Congress  from  any  Chamber  of  Commerce,  Board 
of  Trade,  Municipal  Organization  or  Press  Association  which 
sets  forth  the  necessity  or  prays  for  the  provision  of  any  new 
system,  or  which  complains  of  and  seeks  redress  for  any  existing 
grievances.  But  as,  nevertheless,  a  change  of  a  certain  character 
has,  on  the  one  hand,  been  recommended  by  the  President  of 
the  United  States  and  some  of  his  principal  advisers,  and  as,  on 
the  other,  certain  citizens,  of  acknowledged  ability  and  enter 
prise,  seek  from  Congress  aid  and  authority  to  inaugurate  a  sys 
tem  of  an  entirely  different  character,  it  is  important  to  next 
subject  to  analysis  the  elements  of  the  respective  propositions, 
and  see  how  far  they  are  worthy  of  popular  consideration  and 
endorsement.  And  first  as  regards  the  Government  proposition. 


REVIEW   OF  THE   GOVERNMENT  PROPOSITION. 

First. — As  the  Fifth  Amendatory  Article  of  the  Constitution 
of  the  United  States  provides  that  private  property  shall  not  be 
taken  for  public  uses  without  just  compensation  ;  and  as  the  act 
of  1866,  in  addition,  specifically  stipulates  that  if  at  any  time 
the  United  States  shall  decide  to  take  possession  of  the  tele 
graphic  system  for  military,  postal  or  other  purposes,  it  shall  pur 
chase  all  lines,  property  and  effects  of  existing  companies  at  a 
fair  appraisement,  it  is  legitimate  to  assume  that  the  people  of 
the  United  States  will  pay,  at  least,  a  fair  market  price  for 
whatever  they  propose  to  take  possession.  But  how  much  will 
that  price  probably  be  ? 

In  answer  to  this  question  we  have  first  the  result  of  an  inves 
tigation,  submitted  to  a  Select  Committee  of  the  House  of  Eepre- 
sentatives  on  the  Telegraph,  by  Gardiner  G.  Hubbard,  Esq.,  who, 


21 

as  the  principal  advocate  of  a  company  contemplating  a  similar 
purchase,  would  not  naturally  present  an  exaggerated  estimate. 
This  gentleman's  figures  of  the  total  primary  cost  likely  to  be 
incurred  by  the  Government,  as  a  consequence  of  the  proposed 
adoption  of  the  telegraph,  are  as  follows  : 

Estimate  of  appraisement  of  existing  lines,  $30,000,000. 

But  with  a  reduction  of  the  rate  of  charges,  as  proposed  under  the 
Government  system — namely,  twenty -five  cents  for  every  twenty- 
five  words — it  is  certain  that  the  number  of  despatches  offered 
for  transmission  would  largely  increase,  and  to  meet  this  increase 
new  facilities  in  the  shape  of  additional  wires  would  be  needed. 
Mr.  Hubbard  estimates  such  extensions  as  requiring  270,000 
miles  of  new  wire,  at  a  cost  (at  $100  per  mile)  of  $27,000,000. 
Mr.  Orton,  of  the  Western  Union,  on  the  other  hand,  as  the 
result  of  the  experience  of  that  Company,  says  330,000  miles 
would  be  needed,  at  a  cost  per  mile  which  will  approach 
much  closer  to  $150  rather  than  $100.  Then,  again,  the 
bill  for  telegraphic  absorption  by  the  Government,  endorsed 
by  the  Postmaster-General,  proposes  to  establish  a  telegraph 
station  in  connection  with  every  post-office  in  the  country,  the 
gross  receipts  of  which  for  postages  are  not  less  than  $100  per 
annum.  The  estimate  for  such  further  extension  is  fixed  by 
Mr.  Hubbard  at  $6,000,000  additional,  making  the  total  first  and 
minimum  cost  to  the  Government  of  the  proposed  scheme  not 
less  than  $63,000,000. 

It  should,  however,  be  stated  that  the  Postmaster-General, 
in  his  recent  report,  December,  1872,  expresses  an  opinion, 
as  a  result  of  his  investigations,  that  a  new  system  of  tele 
graph,  "  equal  in  extent  to  the  present "  one,  could  be  con 
structed  by  the  Government  for  a  total  cost  of  $11,880,000. 
But  the  utter  absurdity  of  this  official  estimate  becomes  at  once 
apparent,  when  it  is  considered  that  at  least  an  equal  sum  has 
been  expended  by  the  various  telegraph  and  railway  companies 
for  simply  so  much  of  the  existing  telegraphic  system  of  the 
country  as  has  been  constructed  since  the  year  1866,  and  that 
the  cost,  of  such  labor  and  material  as  would  be  required  in  any 
new  construction  has  not  since  experienced  any  decline,  but,  on 
the  contrary,  in  some  respects  has  been  augmented. 

In  a  report  submitted  to  the  House  of  Representatives,  Decem 
ber  20th,  1872,  the  Committee  on  Appropriations,  on  the  other 


22 

hand,  in  discussing  this  subject,  use  the  following  language : 
"The  purchase  and  extension  of  lines  necessary  to  transmit 
annually  the  30,000,000  messages  contemplated  by  the  Post 
master-General  would  involve  the  necessity  for  appropriations  or 
a  bonded  indebtedness  which  has  been  estimated  to  equal,  at 
least,  $75,000,000." 

To  meet  now  the  probable  large  expenditure  which  would 
be  necessary,  a  new  national  loan  would  therefore  have  to 
be  authorized ;  the  Government  would  be  again  placed  in 
the  position  of  a  borrower;  the  whole  necessitating  a  new 
issue  of  bonds,  new  syndicates,  new  suspicions  of  partisan 
and  Federal  patronage  and  commissions,  and  an  unavoidable 
further  continuance  of  that  interference  with  the  financial 
interests  of  the  country  which  has  already  given  to  the 
Treasury  Department  a  power  and  an  influence  which  the 
framersof  the  Constitution  never  anticipated  or  intended.  And, 
as  illustrating  further  how  one  interference  by  the  Government 
with  business  that  does  not  legitimately  pertain  to  it  naturally 
tends  to  suggest  and  open  the  way  for  another,  it  may  be  men 
tioned  that  it  has  been  proposed  (unofficially)  to  establish  sav 
ings  banks  all  over  the  country  in  connection  with  the  post- 
office,  and  then  use  the  deposits  to  defray  the  expenses  of  tele 
graphic  purchases  and  constructions — a  scheme  which  has  the . 
taint  of  small,  if  not  of  fraudulent  speculation,  which  involves 
the  dispensing  of  new  patronage,  and  which  would  undoubtedly 
cost  the  Government  far  more  than  any  loan  it  could  otherwise 
negotiate. 

It  is  also  a  matter  of  interest  to  re-view,  in  this  connection,  the 
recent  experience  of  so  practical  a  nation  as  Great  Britain  in  ab 
sorbing  by  purchase  the  telegraphic  system  of  that  country. 
When  the  project  was  first  brought  before  Parliament,  the  esti 
mate  of  cost,  founded  on  the  judgment  of  experts,  was  "  twenty 
years'  purchase"  of  the  net  profits  of  the  several  British  com 
panies  for  the  years  1867-8,  predicated  in  the  aggregate  at  £2,- 
200,000  or  $11,000,000;  but  when  the  contract  was  once  made, 
and  the  actual  results  determined,  it  was  found  that  the  Govern 
ment  had  in  reality  obligated  itself  to  an  expenditure  of  £7,518- 
955,  or  nearly  forty  millions  of  dollars. 

Second.  In  the  bill  reported  by  Hon.  C.  C.  Washburn  from 


23 

the  Select  Committee  of  the  House  on  the  Telegraph,  July,  1870, 
and  which,  at  the  time  mentioned  and  subsequently,  received  the 
approval  of  the  Post-office  Department,  the  rate  for  which  the 
Government  proposed  to  undertake  the  transmission  of  messages 
was  25  cents  for  each  20  words  or  figures,  for  all  distances 
within  the  territory  of  the  United  States.  The  opinion  of  Mr. 
Orton,  Mr.  Prescott,  Mr.  Hubbard,  and  almost  every  other  per 
son  who  had  made  study  of  the  telegraph  in  the  United 
States  a  specialty,  was,  however,  to  the  effect  that  the  sum 
named  could  not  by  any  possibility  reimburse  the  Post-office 
Department  for  the  expense  of  operating  the  telegraph  as 
a  system,  to  say  nothing  of  the  interest  on  the  original  pur 
chase  and  investment.  I  Mr.  Washburn,  as  the  result  of 
his  investigations  (claimed  to  be  most  thorough),  thought 
differently,  and  in  his  report  made  use  of  the  following  language  : 
"  The  Committee  do  not  expect  that  on  extreme  distances  the 
low  rate  of  20  or  25  cents  will  be  self-sustaining,  but  they  do 
expect  that  all  such  differences  will  be  made  up  on  shorter  lines," 
and  "  they  have  made  a  calculation,  based  on  reliable  estimates, 
showing  a  small  profit."  (Report  H.  R  No.  2,365,  p.  34.)  And 
again,  on  page  54  of  the  same  report,  Mr.  Washburn  unqualifi 
edly  asserts  "  that  by  Government  management  and  connection 
with  the  postal  service  a  large  saving  can  be  made  in  expenses, 
and  a  reliable  system  established,  which,  at  a  uniform  rate  of 
25  cents  for  any  distance,  will  be  self-sustaining."  And  yet,  not 
withstanding  these  calculations,  "based  on  reliable  estimates," 
we  find  the  Postmaster-General,  as  the  result  of  two  years'  addi 
tional  experience,  now  proposing  that  the  Government  rate  at 
the  outset  shall  be  33J  cents,  to  be  reduced,  after  a  "  thorough 
renovation  of  the  lines,"  to  30  cents.  It  is,  therefore,  obvious 
that  the  assumption  of  the  Postmaster-General,  if  correct  now, 
places  Mr.  Washburn  in  the  position  of  urging  in  1870  a  scheme 
upon  Congress,  "  based  upon  reliable  estimates,"  which,  if  adopted, 
would  have  entailed  upon  the  Government  an  average  loss  of 
from  8  to  13  cents  on  every  telegraphic  message  of  which  it  un 
dertook  the  transmission. 

CHEAP   TELEGRAPHIC  SERVICE   UNDER    THE   GOVERNMENT  AND 
INCREASED   TAXATION  OF   THE   PEOPLE   CORRELATIVE. 

But  that  the  idea  of  making  the  telegraph,  any  more  than  the 


24 

Post-office,  self-supporting  in  the  bands  of  the  Government  does 
not  really  enter  into  the  plans  of  those  who  advocate  the  scheme 
of  Federal  interference,  it  is  to  be  called  to  mind  that,  in  one  of 
the  earliest  bills  brought  before  Congress  and  earnestly  advo 
cated,  namely,  that  reported  by  Hon.  B.  Gratz  Brown  in  1865, 
it  was  seriously  proposed  that  the  Government  should  construct 
telegraph  lines  and  work  them  in  connection  with  the  Post-office 
at  a  uniform  rate  of  three  cents  per  message — a  proposition — 
then,  equally  as  the  one  now  advocated,  equivalent  to  saying,  that 
the  necessity  of  affording  to  the  people  of  the  United  States 
cheaper  telegraph  service  is  so  imperative  and  apparent  as  to  de 
mand  that  the  Government  shall  annually  add  to  the  already 
heavy  burden  of  taxes  on  the  people  a  large  additional  burden,  in 
order  that  so  desirable  a  result  may  be  effected.  But  it  does  not 
seem  to  have  occurred  to  any  or  all  of  these  gentlemen,  whose 
bosoms  swell  so  readily  with  the  idea  of  Government  philan- 
throph}^,  that  the  Government  has  never  anything  to  give  to  the 
people  in  the  way  of  pecuniary  aid  or  bounty  other  than  what  it 
has  previously  taken  from  them  under  some  form  of  taxation,  with 
some  eight  per  cent,  additional,  to  pay  for  the  cost  of  the  taking. 
And  again,  that  if  it  is  to  be  an  accepted  principle  of  our  national 
policy  that  the  Government  is  to  furnish  to  the  people  such 
things  as  are  acknowledged  to  be  necessary,  it  stands  to  reason 
that  such  service  should  commence  with  those  things  which  are 
of  prime  necessity  rather  than  with  those  which  are  secondary  ; 
and  that  food  and  raiment,  fuel,  shelter,  and  education  belong  to 
the  first  class,  and  telegraphic  service  to  the  latter.  What  the 
annual  deficit  to  the  Government,  transmitting  telegrams  at  the 
rats  of  three  cents  per  message,  would  have  amounted  to  neither 
Mr.  Gratz  Brown  or  any  other  person  has  definitely  stated ;  but 
on  the  basis  proposed  by  Mr.  Washburn,  with  the  concurrence  of 
the  Post-office  Department,  of  25  cents  per  message,  Mr.  Hubbard 
has  presented  to  Congress  the  following  estimate  : 

First. — interest  at  5  per  cent,  on  national  bonds  representing 
the  cost  of  the  lines,  $3,150,000. 

Second. — In  Europe  the  cost  of  transmitting  telegrams  ranges, 
according  to  Mr.  Hubbard,  from  lOyV  cents  gold,  (18TV  cur 
rency)  in  Belgium  to  $1.18  in  Eussia.  (Report  H.  R  41st 


25 

Congress,  28th  Session,  No.  2365,  p.  146.)  And  lie  adds: 
"The  cost  of  transmission  increases  with  the  length  of  the 
message  and  the  distance  of  its  transmission,  though  not  in 
the  same  proportion."  In  Belgium  and  Switzerland,  the 
two  countries  of  Europe  where  the  charges  for  telegraph 
service  are  least,  the  average  distance  to  which  messages  are 
transmitted  is  fifty  miles,  but  in  the  United  States  the 
average  is  three  hundred  miles.  "  To  ascertain,  therefore," 
continues  Mr.  Hubbard,  "the  cost  in  America,  it  will  not 
be  safe  to  add  less  than  fifty  per  cent,  to  the  cost  in  Belgium  for 
the  extra  length  and  distance ;"  which  moderate  assumption 
would  give  27T7F,  currency,  as  the  cost  to  the  Government 
of  each  message  transmitted,  and  involving,  on  the  basis  of 
25  cents  per  message,  a  direct  loss  of  2T7¥  cents  on  each 
message,  or  of  $1,080,000  per  annum  on  the  estimated  volume 
of  business.  To  this  must  be  added  the  annual  expenditure  on 
account  of  extensions,  improvements  and  repairs,  also  estimated 
by  Mr.  Hubbard  at  $2,560,000 — making  an  annual  aggregate  de 
ficit  of  $6,290,000. 

But  it  must  be  borne  in  mind  that  when  Mr.  Hubbard  takes 
the  experience  of  Belgium  as  his  basis  of  comparison,  he  selects 
a  country  which,  if  we  exclude  Switzerland,  is  altogether 
exceptional  in  Europe,  and  one  in  which  the  wages  of  skilled 
labor,  and  the  cost  of  all  the  elements  that  enter  into  telegraphic 
construction  and  operation,  touch  a  very  low  figure.  And,  as 
strikingly  illustrative  of  this  exceptional  character  of  Belgium, 
we  have  the  fact  that  while  wages  and  the  cost  of  material  are 
equally  cheap,  if  not  cheaper,  in  Bavaria  and  Austria,  the 
average  cost  of  a  telegraphic  message  in  the  first  of  these 
countries  is  twenty-two  cents  gold,  and  in  the  latter  fifty-seven 
cents,  and  that  in  neither  Bavaria  nor  Austria  do  the  total 
annual  receipts  from  the  telegraph  approximate  the  aggregate 
annual  requirements  for  telegraphic  expenditure  :  the  deficit  in 
Bavaria  for  1870  having  been  750L  per  cent,  and  in  Austria 
28*2  per  cent.  (See  appendix  to  the  Eeview,  marked  B.)  A 
more  reasonable  estimate  of  the  average  cost  of  transmitting 
Government  telegrams  in  the  United  States,  founded  on 
European  data,  would,  therefore,  more  probably  give  us  one 
hundred,  rather  than  fifty  per  cent,  in  excess  of  the  average 
of  Belgium — carrying  up  Mr.  Hubbard's  estimate  of  the  cost  of 


26 

each  message  from  27T7ir  cents  to  36^  cents,  currency;  and  the  loss 
on  the  same  from  2^  cents  to  lly2^  cents,  or  3T2¥  cents  on  latest 
basis  of  33  cents,  advocated  by  the  Postmaster-General.  But 
this  average  is  not  so  favorable  as  has  been  already  attained  to 
by  the  Western  Union  Telegraph  Company,  when  it  operates 
under  conditions  similar  to  those  existing  in  Belgium,  namely, 
over  limited  areas,  and  through  and  between  dense  centres  of 
population,  the  charge  for  a  message  from  New  York  to  Boston 
(a  distance  of  234  miles),  or  between  New  York  and  Phila 
delphia,  being  at  present  but  thirty  cents  currency,  with  a 
reduction  of  one  half  for  messages  transmitted  by  night.  It  is 
curious  to  note,  also,  in  this  connection,  how  narrow  is  the  margin 
between  surplus  and  deficit  under  even  Belgian  conditions  and 
economy.  t  Thus  M.  Vinchent,  the  Director  of  Belgian  tele 
graphs,  in  a  recent  exhibit  of  the  ten  years'  experience  of  that 
kingdom,  prior  to  and  including  1869,  shows  that  the  excess  of 
receipts  over  expenditures  during  that  time,  for  telegraphic 
operation,  construction  and  repairs,  was  only  581,844  francs 
($116,000),  out  of  an  aggregate  of  receipts  of  11,295,778  francs, 
or  at  the  rate  of  $11,600  per  annum.  And  that  this  small  but 
favorable  annual  average  has  not  since  been  maintained,  is 
proved  by  the  Belgian  statistics  of  1870  (the  last  available), 
which  give  an  aggregate  of  $310,938  telegraphic  receipts,  and 
$305,730  telegraphic  expenditures;  and  out  of  this  last  sum 
only  $18,030  is  credited  to  construction  and  contingencies.* 

If  we  turn  now  to  other  countries  in  which,  although  pos 
sessing  all  the  advantages  of  a  strong  centralized  Government, 
the  same  system,  economy  and  intelligence  which  characterize 
Belgium  do  not  prevail,  the  results  of  telegraphic  operation 
under  the  exclusive  auspices  of  the  State  are  much  more  signifi 
cant.  Thus,  including  in  the  annual  expenditure  the  sums 
disbursed  for  constructions  and  repairs,  as  well  as  for  operating, 
the  accounts  for  the  year  1870  exhibit  the  following  results : 

NORTH  GERMANY.  —  Eeceipts,  $1,621,501;  expenditures, 
$1,721,855  ;  deficit,  $136,215,  or  8'3  per  cent. 

*  M.  Jamar,  Minister  of  Public  Works  in  Belgium,  in  a  recent  report,  also  makes 
this  statement,  that  "  the  net  product  of  the  Belgian  Telegraphic  System  has 
been  diminishing  for  several  years,  and  was  reduced  to  a  point  at  which  there  was 
scarcely  any  profit  in  1868." 


27 

BAVARIA.— Receipts,  $162,248 ;  expenditures,  $284,835  ; 
deficit,  $122,587,  or  751  percent. 

DENMARK.— Receipts,  $104,280 ;  expenditures,  $113,540 ; 
deficit,  8 '8  per  cent. 

SPAIN.— Receipts,  $289,340 ;  expenditures,  $715,109;  deficit, 
147  per  cent. 

AUSTRIA. — Receipts,  $929,221 ;  expenditures,  $1,375,407 ; 
deficit,  28*2  per  cent. 

In  Great  Britain,  where  the  Governmental  system  is  claimed 
to  be  a  success,  the  fiscal  exhibit  of  telegraphic  service  for  the 
fourteen  months  prior  to  March,  1871,  was  as  follows  :  Total  re 
ceipts,  £798,580  ($3,992,900);  total  expenditures,  £1,397,389  ($6,- 
986,945);  deficit,  £598,809  ($2,994,045).  The  expenditures  here 
are  returned  in  two  classes,  namely,  capital  expenditure,  £926,- 
894,  and  working  expenditure,  £470,495  ;  but  under  the  head 
of  the  former  is  included  an  expenditure  of  £346,449  for  poles, 
arms,  wires,  insulators,  instruments,  batteries  and  tools ;  and  also 
the  sum  of  £377,449  for  engineering,  salaries,  alteration  of  build 
ings,  examining  accounts,  law  expenses,  telegraphic  instruction, 
and  the  like — all  of  which  would  seem  to  be  annually  essential 
to  the  working  of  a  system  as  large  as  that  of  Great  Britain,  so 
long  as  it  is  maintained  in  a  condition  of  effectiveness. 

Of  other  telegraphic  systems  under  Government  control,  those 
of  Hungary,  Norway,  Sweden,  Holland,  Portugal,  Roumania, 
the  Indo-European  line,  and  the  lines  of  British  India,  all  in  like 
manner  exhibit,  for  the  year  1870,  a  deficit  of  receipts  as  com 
pared  with  expenditures;  while  only  in  Russia  (where  the  ave 
rage  charge  for  the  transmission  of  messages  is  $1.52),  Belgium, 
Switzerland,  Italy  and  Turkey,  is  there  a  claim  preferred  that  the 
annual  receipts  from  messages  are  equal  to  or  in  excess  of  the 
expenditures  necessary  to  work,  maintain  or  extend  the  lines 
necessary  to  transmit  them.* 

*  Sir  James  Anderson,  in  a  paper  read  before  the  Statistical  Society  of  London, 
June,  1872,  presents  the  following  statement  of  profit  and  loss  contingent  upon 
the  Government  maintenance  of  the  telegraph  during  the  year  1869  in  the  follow 
ing  States  of  Europe — interest  for  construction  only  (and  not  average  annual  ex 
penditure  for  construction)  being  included : 

PROFIT. — Bavaria,  £7,657 ;   Belgium,  £2,901;   Italy  (no  data  relative  to  con 
struction  being  obtainable  since  1861),  £25,966;  Russia,  £120,010;  Switzerland, 
£2,541. 
Loss.— Austria  and  Hungary,  £22,067;  Baden,  £505;  Denmark,  £7,219  ;  France, 


28 

With  such  evidence  illustrative  of  Governmental  management 
of  the  telegraph  in  the  Old  World,  what  must  be  the  economical 
results  of  a  similar  system  in  the  United  States,  where  the  Gov 
ernment,  as  a  general  rule,  always  pays  from  twenty  to  fifty  per 
cent,  more  for  whatever  it  purchases,  in  the  way  of  service  or 
material,  than  private  citizens  ;  and  where,  with  the  possible  ex 
ception  of  the  manufacture  of  small  arms,  no  work  that  it  has 
ever  undertaken,  from  the  building  of  a  ship  to  the  printing  of  a 
book,  compares  favorably  in  point  of  quality  and  economy  with 
the  similar  work  of  individual  ?  The  total  deficiency  of  six  mil 
lions,  which  Mr.  Hubbard  estimates  the  people  must  be  annually 
called  upon  to  pay  by  taxation,  under  Mr.  Washburn's  bill,  for 
the  luxury  of  having  the  Government  own  the  telegraph,  will, 
in  all  probability,  have  to  be  multiplied  by  two — possibly  by 
three — to  represent  the  figures  which  will  approximate  the  truth, 
and  all  for  the  benefit  of  not  over  one  thirty-second  part  of  our 
population  ;  that  being  the  proportion  which  Mr.  Palmer,  of  the 
Committee  on  Telegraphs,  reported  to  the  House  of  Eepresenta- 
tives,  as  likely  to  use  the  telegraph  at  the  rate  of  three  messages 
per  month,  provided  that,  under  the  reduction  of  rates  by  the 
Government,  the  whole  number  of  messages  should  increase  to 
the  Qxtent  of  40,000,000  per  annum.* 

It  may  be,  however,  that  to  some  the  addition  of  six,  twelve, 
or  even  eighteen  millions  to  a  present  annual  national  expenditure 
of  about  three  hundred  millions,  will  appear  insignificant  in 
comparison  with  the  results  promised  or  anticipated.  If  there 
be  such,  the  startling  fact  is  commended  to  their  attention,  that 
at  the  present  time  the  ratio  of  increase  in  our  national  expendi 
tures,  for  what  may  be  called  the  civil  service,  is  in  excess  of 
that  of  any  of  the  Governments  of  the  Old  World — and  since 

£34,520;  Germany  (north),  £57,888;  Great  Britain  (Indo-European),  £57,688; 
Greece,  £11,688;  Holland,  £23,627;  Norway,  £6,667  ;  Roumania,  £13,209;  States 
of  the  Church,  £1,687  ;  Sweden,  £1,782. 

*  Excluding  press  reports,  the  largest  number  of  messages  sent  in  any  one 
year  (1872)  was  probably  not  in  excess  of  thirteen  millions.  This  aggregate,  ap 
portioned  to  a  population  of  39.000,000,  would  give  one  telegraph  message  once 
a  year  for  every  three  persons,  at  an  average  cost  to  each  of  about  21  cents  ;  and 
yet  it  is  for  the  purpose  of  relieving  the  people  of  this  great  burden  that  tho 
Government  proposes  to  incur  an  expenditure  of  over  $6,000,000  per  annum. 


29 


1864  has  been,  on  the  average,  in  excess  of  eight  per  cent,  per 
annum,  while  during  the  same  period  the  ratio  of  increase  of 
population  has  not  been  equal  to  three  per  cent,  per  annum. 
And  also,  as  illustrating  the  influence  of  the  present  burden  of 
taxation  on  the  strictly  agricultural  interests,  the  facts  brought 
out  by  recent  investigations  in  New  Hampshire ;  which  show 
that  in  one  of  its  most  fertile  and,  at  the  same  time,  favorably 
situated  districts  in  respect  to  markets — Eockingham  County — 
the  present  average  annual  tax  for  State,  county  and  local 
purposes,  apportioned  to  each,  farm  producing  on  an  average 
an  annual  product  of  $680.40,  is  about  fifty  dollars,  or,  in 
cluding  national  taxes,  direct  and  indirect,  approximately  one 
hundred  dollars — causing  a  continued  decrease  in  the  value  of 
all  real  property,  and  a  steady  decline  in  population  ;  or  that 
other  circumstance,  that  to-day  the  future  title  to  no  inconsider 
able  part  of  the  real  estate  of  one  entire  State — South  Carolina 
— bids  fair  to  be  a  title  derived  from  the  Sheriff  for  sales  in 
default  of  ability  on  the  part  of  the  landowners  to  pay  the  taxes 
assessed  upon  them.  Surely,  in  view  of  such  facts  as  these,  it  is 
a  matter  worthy  the  most  serious  consideration  of  both  Congress 
and  the  people,  whether  there  are  any  circumstances,  short  of 
the  preservation  of  the  national  honor  or  existence,  which  can 
justify  the  smallest  particle  of  increase  in  the  weight  of  any 
existing  national  burden. 

In  one  respect,  it  must  be  admitted  that  the  Federal  Gov 
ernment  would  have  advantages  in  constructing  telegraph  lines 
not  possessed  by  individuals  or  incorporated  companies  ;  for  it 
could  purchase  its  wire  sixty -two  per  cent,  cheaper  at  the  port 
of  importation ;  have  its  poles  delivered  at  twenty  per  cent,  less 
on  the  borders ;  and  be  freed  from  the  necessity  of  paying 
annual  taxes  and  licenses  to  the  various  States  and  municipal 
ities.  But  what  sort  of  consistency  or,  to  use  a  stronger  word, 
u  decency  "  is  there  in  a  Government  justifying,  on  the  grounds 
of  expediency  or  necessity,  the  continual  imposition  and  main 
tenance  of  such  burdens  on  its  citizens,  and  then  not  only  refus 
ing  to  be  bound  by  them  itself,  but  even  pleading  the  privilege 
of  such  exemption  as  a  good  and  sufficient  reason  why  it 
should  interfere  with  the  business  of  such  citizens. 

There  is  another  point  of  similar  significance  in  this  same  con- 


30 

nection.  Thus,  for  a  period  reaching  back,  at  least,  to  the  incep 
tion  of  the  war — the  one  policy  which  more  than  almost  any 
other  has  characterized  the  Federal  Government,  has  been,  that 
all  legislation  should  be  in  the  direction  of  maintaining  a  higher 
standard  for  the  wages  of  labor  in  the  United  States  than  is 
maintained  in  Europe. 

Now,  out  of  the  whole  amount  paid  by  the  "Western  Union 
Company  during  the  fiscal  year  1872  for  operating  the  tele 
graph,  nearly  three  fifths  were  disbursed  on  account  of  wages 
or  salaries ;  which  wages  or  salaries  were  from  two  to  four 
times  in  excess  of  what  are  paid  for  similar  services  in  Europe. 
Thus,  for  example,  while  the  London  telegraph  offices  are 
operated  by  females,  at  wages  ranging  from  eight  to  twenty 
shillings  per  week,  the  wages  paid  to  the  fifty  female  operators 
in  the  office  of  the  Western  Union  Company  at  New  York 
range  from  $40  to  $65  currency  per  month,  or,  in  more  direct 
comparison  with  the  wages  of  the  English  female  operators,  from 
40  to  66  shillings  per  week.  And  what  is  true  in  respect  to 
comparative  wages  in  this  department  of  the  telegraph  is  true  of 
every  other  ;  and  yet  the  Federal  Government  now  makes  this 
very  state  of  affairs,  which  all  its  recent  legislation  is  claimed  to 
have  occasioned,  the  main  cause  of  complaint  against  the  existing 
Telegraph  Companies  for  not  providing  cheaper  service  ;  and 
proposes,  by  absorbing  the  telegraph  and  making  the  postmasters 
do  duty  as  operators,  to  further  condemn  in  practice  what  it  still 
justifies  in  theory. 

THE  QUESTION  OF  GOVERNMENT  EFFICIENCY. 

Third — But  granting  that  the  proposition  put  forth  by  the 
advocates  of  the  absorption  of  the  telegraph  by  the  Govern 
ment  be  true,  namely,  that  the  people  are  in  present  and 
urgent  need  of  cheaper  and  greater  telegraphic  facilities,  the 
question  is  a  most  pertinent  one,  whether  the  ends  sought 
for  are  in  any  degree  likely  to  be  attained  through  the  agency 
of  the  Government?  That  increased  cheapness  is  only  like 
ly  to  be  reached  under  Government,  through  increased  taxa 
tion,  has  been  already  demonstrated ;  but  how  about  greater 
efficiency?  To  this  question  a  full  and  sufficient  answer 
would  seem  to  be  afforded  in  the  past  and  present  record 


31 

of  the  business  which  Government  has  already  monopolized. 
Take  as  one  illustration  the  Post-office  itself — the  depart 
ment  which  now  proposes  to  extend  its  business  by  absorbing 
the  telegraph.  Does  not  every  one  know  that  in  point  of  effi 
ciency,  trustworthiness,  and  attention  to  the  interests  of  the  pub 
lic,  the  Post-office  in  the  United  States  is  far  inferior  to  the  postal 
systems  of  Great  Britain,  Belgium  or  Holland  ?  Are  there  any 
towns  in  Great  Britain,  of  from  500  to  1,500  inhabitants,  in  the 
midst  of  a  densely  populated  district,  which,  like  similar  towns 
in  New  England,  have  mail  facilities  limited  to  three  times  a 
week  ?  Is  there  a  case  parallel  under  any  of  the  more  highly 
civilized  governments  of  the  world  like  that  which  now,  and  for 
years  past,  has  existed  on  the  Pacific  coast,  of  a  whole  commu 
nity  conforming  to  the  strict  letter  of  the  law  by  placing  an 
U.  S.  postage  stamp  on  their  more  valuable  letters,  and  then,  at 
eight  times  additional  cost,  confiding  the  same  letters  to  a  private 
express  company  for  transmission  and  delivery  ?  What  a  com 
mentary  on  the  honesty  of  its  officials,  and  the  integrity  of  its 
civil  service,  does  the  Post-office  Department  itself  confess  when 
it  authorizes  everywhere  the  publication  of  the  following  notice : 
"Valuable  letters  should  invariably  be  taken  to  the  Post-office  and 
registered.  The  registry  fee  to  all  parts  of  the  United  States  is  15 
cents"  postage  in  addition. 

Postage  at  one  penny,  and  the  abolition  of  the  franking  priv 
ilege,  became  established  facts  in  Great  Britain  as  far  back  as 
1840 ;  but  it  was  not  until  1863,  or  twenty-three  years  sub 
sequent,  that  the  Post-office  Department  of  the  United  States 
could  see  its  way  clear  to  the  adoption  of  a  uniform  rate  of  three 
cents  on  every  half  ounce  letter  to  all  portions  of  its  territory. 
During  the  session  of  Congress  which  adjourned  in  May,  1872, 
the  use  of  the  so-called  "  postal  cards" — a  roundabout  device  for 
effecting  a  reduction  of  postage  without  meeting  the  question 
manfully,  and  withal  equivalent  to  saying  to  the  people  of  the 
United  States,  "  If  you  will  write  your  letters  so  that  the 
Post-office  officials  may  read  them,  the  postage  shall  be  one 
cent,  but  if  otherwise,  three" — was  authorized  by  Congress;  and 
yet  up  to  the  present  writing,  December,  1872,  the  public  have 
derived  no  benefit  from  the  authorization ;  and  simply  for  the 
reason  that  the  experts  of  the  Post-office  Department,  after  a 
year  or  more  deliberation  on  the  subject,  forgot  to  have  the 


32 

bill  accompanied  with  the  essential  provision  of  an  appropria 
tion  necessary  to  put  the  device  into  operation. 

And  what  is  true  of  the  business  of  the  Post-office  is  true  of 
the  business  of  almost  every  other  department  of  Government  ; 
the  appraisement  of  goods  liable  to  customs  duties,  the  system 
of  entries  and  withdrawals,  of  storage  in  bond,  the  inspection 
of  vessels,  the  collection  of  customs  revenue — in  all  of  which  the 
administration  of  imperfect,  and  what  in  most  countries  are  ob 
solete  laws,  seems  always  in  the  direction  of  needless  obstruction 
and  expense  to  the  business  interests  of  the  community,  and 
rarely,  if  ever,  in  the  direction  of  economy  and  convenience ; 
added  to  all  of  which  is  a  tacitly  recognized  system  of  adjudica 
tion  between  citizens  and  the  several  executive  departments  of 
the  Government,  which  in  all  questions  of  doubt  uniformly  ap 
plies  the  benefit  of  the  doubt  to  the  Government,  and  rarely,  if 
ever,  to  the  individual. 

In  short,  were  any  individual  or  corporation  to  undertake  to 
do  business  in  the  same  dilatory,  expensive  and  vexatious 
method  as  the  Government  of  the  United  States  to-day  dis 
charges  all  of  its  functions  having  relation  to  the  production, 
distribution  and  consumption  of  the  country,  their  existence,  so 
far  as  public  patronage  was  concerned,  would  be  exceedingly 
limited ;  arid  yet  it  is  under  just  such  circumstances  that  the 
public  are  asked  to  seriously  consider  the  expediency  of  trans 
ferring  the  entire  telegraph  system  of  the  country  to  an  agency 
whose  present  business  capacity  is  utterly  inadequate  to  the 
proper  discharge  of  its  present  business  responsibilities. 

UNRELIABILITY  OP  THE   GOVERNMENT  ESTIMATES. 

It  is  certain,  furthermore,  that  if  any  additional  evidence  was 
needed  in  support  of  these  conclusions  there  could  be  no  better 
field  to  search  for  it  than  in' the  several  reports  which  have  been 
made  in  favor  of  the  Government  theory  of  the  telegraph,  since 
its  original  conception  in  this  country  and  first  presentation  to 
the  public ;  for  no  one  can  candidly  examine  these  reports, 
from  the  one  made  by  Hon.  B.  Gratz  Brown,  in  1865,  down  to 
the  last  by  the  present  Postmaster-General,  without  being  most 
painfully  impressed  with  a  conviction  that  the  Government  is 
being  urged  to  take  action  upon  a  most  important,  financial, 


33 

political  and  social  question,  in  respect  to  which  its  advisers 
have  only  the  most  indefinite  and  inadequate  information. 
Thus,  in  1865,  Mr.  Gratz  Brown  advised  three  cents  per  message, 
for  all  distances  throughout  the  United  States,  as  the  proper 
tariff  to  be  adopted  by  the  Government  in  the  operation  of  the 
telegraph.  In  1868,  Mr.  E.  B.  ^Vashburne  proposed  one  cent 
per  word,  exclusive  of  date,  address  and  signature,  with  three 
cents  for  postage,  and  two  cents  for  delivery  of  each  message. 
In  1870,  Mr.  C.  C.  Washburn  was  confident,  "  from  a  calculation 
based  on  reliable  estimates,"  that  a  tariff  of  from  twenty  to 
twenty-five  cents  per  message,  inclusive  of  date,  address  and 
signature,  would  afford  the  Government  a  small  profit.  In 
April,  1872,  Mr.  R  B.  Lines,  of  the  Post-office  Department, 
in  advocating  the  theory  of  Government  ownership  before 
the  House  Committee  on  Appropriations,  expressed  an  opinion 
that  "  no  reduction  at  all  should  be  made  until  the  lines  had  been 
in  possession  of  the  Government  for,  at  least,  a  year/'  and  that 
then  discretion  should  be  "  left  to  the  Postmaster-General  to 
regulate  the  rates  within  certain  limits,  according  to  the  course 
of  business  as  shown  by  the  books  of  the  Department."  And 
now,  in  December,  1872,  comes  the  Postmaster-General  himself 
with  a  proposition  to  make  the  rates  at  the  outset  thirty-three 
cents  on  all  twenty-five  word  messages  within  the  United 
States,  and  "  after  the  lines  have  been  renovated,"  thirty  cents. 
It  is  also  to  be  noted  that  Mr.  Hubbard,  who  first  proposed 
25  cents  under  his  system,  for  a  circuit  of  500  miles,  now 
thinks  25  cents  for  a  circuit  of  250  miles  a  more  prudent 
assumption.  Now,  it  should  not  be  overlooked  that  each  of 
these  gentlemen  has  assumed  to  speak  with  authority  de 
rived  from  careful  investigation,  and  that  all  have  pro 
fessed  confidence,  based  on  "reliable  estimates,"  that  if 
the  Government  should  adopt  the  rates  by  them  recom 
mended,  the  realization  of  a  profit  on  the  business  trans 
acted  would  be  reasonably  certain.  It  is  clear,  therefore, 
that  somebody  has  blundered ;  but  as  the  blunders  involve 
losses  of  only  a  few  millions,  and  that  to  the  National  Treasury, 
the  matter  may  be  passed  over  in  these  days  of  large  taxes  and 
corresponding  expenditures  as  of  comparatively  little  conse 
quence. 

3 


34 

Coming  next  to  the  report  of  the  Postmaster-General  for 
December,  1872,  we  find  that  while  he  has  found  sufficient  room 
to  present  to  the  American  public  extensive  tables  of  European 
telegraphic  statistics,  he  has  not  been  able  to  afford  space  in  the 
same  report  for  the  statistics  of  the  last  year's  business  of  the 
largest  company  in  the  United  States,  which  were  furnished 
promptly  and  in  detail  to  him  on  application.  He  has,  how 
ever,  furnished  a  table,  professing  to  exhibit  the  condition  of 
the  telegraph  systems  of  the  United  States  and  Europe,  of 
which  the  following  is  a  partial  analysis : 

Under  the  head  of  Great  Britain  will  be  found  the  following : 
"  Complete  returns  for  previous  years  not  having  been  received,  the 
estimates  of  the  British  Post-office  for  the  year  ending  March  31st. 
1873,  are  used  instead;"  and  this  in  the  face  of  the  fact  that 
complete  returns  of  the  British  Government  system  for  the 
first  fourteen  months  of  its  existence  were  officially  published 
in  the  summer  of  1871,  and  have  ever  since  been  readily  acces 
sible. 

Throughout  the  whole  of  this  table,  moreover,  there  runs  the 
mistake  of  adopting  one  standard  of  comparison  for  stating  the 
telegraph  business  of  Europe,  and  another  and  different  one  for 
stating  the  telegraph  business  of  the  United  States.  Thus, 
while  in  the  United  States  a  message  is  only  counted  once, 
whether  it  is  transmitted  one  hundred  or  one  thousand  miles, 
it  is  counted  in  Europe  over  and  over  again,  in  each  petty  State 
through  which  it  is  transmitted.  In  this  manner  the  apparent 
number  of  messages  in  Europe  is  greatly  increased  above  the 
number  actually  transmitted ;  and  by  not  recognizing  this  fact 
the  tables  of  the  Postmaster-General  are  made  to  present  state 
ments  that,  to  say  the  least,  will  not  sustain  investigation. 
Thus,  for  example,  the  average  receipt  for  messages  in  Bavaria, 
for  1870,  is  stated  by  the  Postmaster-General  to  be  sixteen 
cents;  but  the  official  report  of  Bavaria  for  that  same  year 
gives  the  following  figures  :  Internal  messages,  295,170  ;  inter 
national,  197,016  ;  total,  492,186.  The  receipts  being  $162,243, 
the  average  per  message  of  every  kind  was,  therefore,  not  16,  but 
32T91F.  But  by  including  in  the  aggregate  219,992  received  mes 
sages,  212,067  transit  messages,  and  85,920  free  messages,  the 
Postmaster-General's  table  swells  the  total  number  of  messages  to 


35 

1,010,176,   and  thus  reduces  the  average  from  thirty-two   to 
sixteen  cents. 

In  Baden^  according  to  Mr.  Creswell's  table,  there  were  trans 
mitted,  in  1870,  629,201  messages  for  $85,008,  being  an  average 
of  thirteen  cents  per  message ;  while  the  actual  number  of  mes 
sages  sent  in  that  country,  exclusive  of  Government  messages, 
was  337,442  ;  and  had  Mr.  Creswell  had  before  him  the  "  Tariff 
General  des  Correspondances  Telegraphiques"  published  at  Berne 
in  1869,  by  the  Convention  Te'le'graphique  International — and 
without  which  important  table  his  means  of  information  must 
have  been  singularly  deficient — he  would  have  read  that  the 
lowest  price  at  which  an  internal  message  can  be  sent  within  the 
small  State  of  Baden  is  eighteen  kreutzers  for  ten  words ;  or  at 
the  rate  of  24.4  cents  for  twenty  words,  while  for  International 
messages  another  and  still  higher  rate  is  adopted. 

In  Italy,  also,  according  to  the  Postmaster-General's  table, 
there  were  transmitted,  in  1870,  2,378,119  messages,  upon  which 
the  tolls  amounted  to  $945,234,  making  an  average  rate  per 
message,  as  stated  in  the  table,  of  thirty-two  cents ;  but  which, 
according  to  the  ordinary  rules  of  arithmetic,  should  give  thirty- 
nine  and  eight-tenths  cents  per  message. 

The  main  object  of  the  Postmaster-General,  in  common  with 
all  the  other  advocates  of  the  proposed  plan  of  Government 
absorption,  is  to  show  that  the  rates  for  telegraphic  correspond 
ence  in  the  United  States  are,  as  compared  with  those  of  Europe, 
extremely  and  unnecessarily  high  ;  but  they  either  omit  or  fail 
to  give  prominence  to  two  circumstances,  which  are  absolutely 
essential  to  the  determination  of  any  correct  conclusions.  The 
first  of  these  is,  "  that  while  there  are  in  the  United  States  but 
one  kind  of  messages,  there  are  in  Europe  three  classes,  called, 
respectively,  internal,  international  and  ^transit.  The  internal 
messages  are  those  which  are  transmitted,  received  and  delivered 
in  the  same  country.  The  international  messages  are  those 
which  are  transmitted  from  one  country  into  another.  The 
transit  messages  are  those  which  are  neither  sent  nor  received 
in  the  country  in  which  they  are  reckoned,  but  are  simply  shot 
through  it  in  going  from  one  State  to  another.  In  this  way 
small  States  like  Bavaria,  Belgium,  Baden,  etc.,  which  really 
send  but  a  small  number  of  messages,  are  able  to  show  an  ap- 


parently  large  annual  traffic.  Countries  so  situated  in  Europe, 
as  a  rule,  have  adopted  a  low  rate  of  charges  for  their  internal 
messages,  the  deficit  being  made  up  by  a  tax  upon  international 
and  transit  messages  paid  by  surrounding  States.  Thus,  for  ex 
ample,  Belgium  charges  a  minimum  rate  of  half  a  franc  for  the 
transmission,  receipt  and  delivery  of  a  message  within  her  own 
territory,  while  she  imposes  double  rates  upon  both  international 
and  transit  messages,  one  class  of  which  requires  only  one  half 
the  service  of  an  internal  message — being  simply  either  sent  or 
received  from  or  into  the  country — and  the  other  class  requiring 
no  service  at  all,  being  simply  sent  through  the  air  on  its  way 
from  one  neighboring  State  to  another.  The  case  would  be 
analogous  to  that  of  one  of  our  States  which  should  set  up  an 
independent  telegraph  system  of  her  own,  and  should  charge  a 
low  rate  for  the  transmission  of  messages  within  her  own  terri 
tory,  and  impose  a  heavy  tax  upon  messages  passing  through 
her  territory  between  the  other  States  of  the  Union.  Suppose 
the  State  of  New  Jersey,  for  example,  was  to  establish  an  inde 
pendent  telegraph  system,  and  fix  the  rates  for  messages  passing 
within  her  own  territory  at  the  Belgian  rate  of  ten  cents,  and 
then  charge  twenty  cents  for  every  message  passing  through  her 
territory.  The  result  would  be  very  favorable  to  the  finances 
of  New  Jersey,  as  the  tax  upon  the  correspondence  between 
New  York  and  Washington  alone  would  more  than  pay  the  en 
tire  cost  of  her  own  system." 

The  second  circumstance,  to  which  the  advocates  of  the 
Government  theory  fail  to  give  prominence,  is  the  difference  in 
the  relative  cost  of  the  telegraphic  systems  of  Europe  and  the 
United  States — a  difference  which  may  be  succinctly  expressed 
by  saying  that,  as  a  general  thing,  owing  to  distances  in  the 
density  of  population  and  area  of  geographical  occupation,  it 
requires  the  construction  of  ten  miles  of  wire  in  the  United 
States  to  one  in  Europe  to  do  the  same  business,  and  that  the 
cost  of  everything  in  the  United  States,  in  the  way  of  telegraphic 
construction  and  operation,  is  on  an  average,  full  fifty  per 
cent,  greater  than  in  Europe.  How  entirely,  however,  the  Post 
master-General  puts  a  different  complexion  on  this  last  proposi 
tion  is  evidenced  by  the  statement  of  his  tables,  that  while  the 
cost  of  constructing  each  mile  of  telegraph  line  in  the  United 
States  is  $120,  and  of  each  mile  of  wire  $30,  the  cost  in  Great 


37 

Britain  is  $164  for  each  mile  of  line,  and  $41.22  for  each  mile 
of  wire.* 

To  show  now  the  unreliability  of  all  this,  it  is  only  necessary 
to  call  to  mind  that  the  greater  portion  of  the  telegraph  wire 
used  in  the  United  States  is  made  in  England,  and  that  England 
is  to-day  the  cheapest  place  in  the  world  in  which  wire  can  be 
purchased — the  relative  cost  of  No.  8  "extra  best  best"  galvanized 
iron  wire  being  at  present  5£  cents  gold  in  Manchester,  and  10! 
cents  currency  in  New  York ;  and,  also,  that  not  a  little  of  the 
wire  now  in  use  in  the  United  States,  erected  during  the  war, 
has  cost,  from  causes  over  which  the  telegraph  companies  could 
have  no  control,  as  much  as  twenty  cents  per  pound  ;  and  that 
if  the  United  States  Government  were  now  to  construct  new 
lines,  it  would  find  that  the  simple  conveyance  of  the  wire  to 
not  a  few  localities  would  require  an  expenditure  equal,  or  more 
than  equal,  to  what  the  wire  originally  cost  at  the  port  of 
importation.  The  impossibility  of  instituting  a  fair  comparison 
— such  as  Mr.  Creswell  attempts — between  the  cost  of  tele 
graphic  lines  in  Europe  and  the  United  States,  is  further  shown  by 
the  fact  that  while  the  sizes  of  telegraph  wire  used  in  the  United 
States  are  of  6,  7,  8  and  9  gauge  (none  being  employed  smaller 
than  the  latter),  the  wire  used  very  largely  in  Europe  is  of  No. 
11  gauge,  weighing  but  one  half  as  much  as  No.  8,  and  costing 
proportionately  less.  No.  6  wire,  of  which  there  is  a  consider 
able  amount  used  in  this  country,  weighs  550  pounds  per  mile, 
and  costs  $57.75  per  mile,  delivered  in  the  city  of  New  York. 
No.  8  wire  weighs,  in  round  numbers,  400  pounds  per  mile, 
and,  at  10£  cents  per  pound,  costs  $42  per  mile.  No.  9,  the 
smallest  wire  used  in  this  country  for  telegraph  lines,  weighs 
340  pounds  per  mile,  and  costs,  at  the  place  of  importation, 
$35.70  per  mile.  It  is,  therefore,  somewhat  difficult  to  see  how 
it  is  that  Mr.  Creswell  is  able  to  state  that  wire  costing  from 
$35.70  to  $57.75  per  mile  at  the  place  of  importation,  can  be 
transported  all  over  this  broad  continent,  and  erected  along  the 
lines  of  the  railway  and  post  roads,  at  an  average  cost  of  $30 

*  In  a  note  at  the  bottom  of  the  Postmaster-General's  tables  it  is  stated  that 
the  cost  of  the  lines  and  apparatus  of  the  English  lines  ($164)  is  "  estimated  at 
the  average  of  Continental  lines;"  but  if  reference  is  made  to  the  estimated  cost 
of  Continental  lines  in  the  same  t£,ble,  the  sum  given  will  be  found  to  be  $170.72, 
and  not  $164. 


38 

per  mile,  to  say  nothing  of  the  insulators,  cross-arms  and  other 
appurtenances  necessary  to  its  maintenance  and  operation.* 

In  the  United  States,  according  to  Mr.  Creswell's  tables,  the 
whole  number  of  messages  transmitted  by  all  the  telegraph  com 
panies  doing  business  in  1872  was  13, 700,000,  (including  nearly 
2,000,000  press  messages),  for  which  the  receipts  were  $9,590,000, 
or  at  an  average  of  70  cents  per  message.  But  in  the  statistics 
furnished  to  the  Postmaster-General  by  the  Western  Union  Tele 
graph  Company  (but  not  published)  it  was  shown  that  this  single 
company  transmitted  in  1872  10,933,318  messages,  exclusive  of 
press  and  weather  reports,  for  which  was  received  $7,040,803.53, 
less  $220,395.75  refunded  to  other  lines  and  uncollectable ; 
or,  $6,820,407.76,  being  an  average  of  62  conts  per  message  ;  and 
for  the  transmission  of  1,512,361  estimated  press  messages, 
$979,083.71,  making  a  total  of  14,444,100  messages,  and  $7,799,- 

*  The  following  analysis  of  the  Postmaster-General's  estimate  of  the  past  and 
prospective  cost  of  the  telegraph  system  of  the  country  is  copied  from  the  Journal 
of  the  Telegraph: 

"  The  majority  of  lines  in  this  country,"  says  Mr.  Creswell,  "  have  been  built  very 
cheaply;  their  entire  cost,  including  patents,  being  probably  much  less  than 
$10,000,000.  Data  in  possession  of  this  Department  show  that  many  lines  have 
been  lately  built,  probably  not  of  the  best  quality,  but  fully  up  to  the  average 
standard,  for  not  more  than  $!15  per  mile  of  single  wire  line,  and  $30  per  mile  of 
additional  wire.  For  equipment  an  allowance  of  $5  per  mile  is  ample.  Were  all 
the  wires  to  be  strung  at  the  same  time,  as  they  would  be  were  the  present  system 
to  be  duplicated  by  the  Government,  the  cost  would  probably  be  much  less.  The 
cost  of  a  new  system,  equal  in  extent  to  the  present,  would,  at  the  above  rates,  be 
$11,880,000." 

The  extent  of  the  system  which  Mr.  Creswell  states  could  be  reproduced  at  a 
cost  of  $11,880,000  embraces  about  80,000  miles  of  line  and  200,000  miles  of  wire. 

The  only  estimate  accompanying  the  Postmaster-General's  Report,  going  to  show 
the  cost  of  constructing  a  similar  system  in  the  United  States,  is  one  furnished  by 
Mr.  Charles  T.  Chester,  of  this  city.  In  this  estimate  Mr.  Chester  gives  the  cost  of 
constructing  75,000  miles  of  line  and  175,000  miles  of  wire,  including  equipments, 
at  $18,253,625  ;  provided  the  wire  is  imported  free  of  duty.  This  estimate,  which, 
by  the  way,  is  not  footed  in  Mr.  Creswell'1  s  report,  doss  not  include  cables  for  river 
crossings,  of  which  the  Western  Union  Company,  alone,  has  in  operation  234£ 
miles. 

Mr.  Chester  has  achieved  some  notoriety  as  the  manufacturer  of  a  certain  style  of 
telegraphic  apparatus,  but,  we  believe,  has  never  had  any  experience  in  construct 
ing  telegraph  lines,  with  the  single  exception  of  the  fire  alarm  telegraph  of  the  City 
of  New  Tork.  This  system  is  embraced  in  the  following  inventory,  for  which  we 
are  indebted  to  the  President  of  the  New  York  Fire  Department: 

INVENTORY  OF  LINES  AND  APPARATUS  BELONGING  TO  THE  NEW  YORK  FIRE 
DEPARTMENT. 

625  Miles  of  wire. 
2,650  Telegraph  poles. 
2,500  Feet  of  submarine  cable. 

549  Street  boxes. 
84  Gongs. 


39 

491.49  in  telegraph  receipts.  Now,  deducting  the  messages  sent 
by  the  Western  Union  Company  from  the  total  number  stated  in 
Mr.  Creswell's  table  as  having  been  sent  by  all  the  companies  in 
the  United  States,  and  deducting  also  the  telegraph  receipts  of  this 
company  from  the  total  telegraph  receipts  of  all  the  lines,  we  have 
the  following  most  curious  and  remarkable  result,  namely :  that 
the  several  lines  in  the  United  States,  in  opposition  to  the  Western 
Union,  sent  during  the  year  but  1,255,501  messages  (of  which 
nearly  500,000  were  press  messages),  for  which  they  received 
$1,790,508.51,  being  an  average  of  $1.42  per  message.  But 
as  the  various  opposition  lines  extend  mainly  over  short  routes, 
where  competition  is  supposed  to  have  reduced  the  rates  to  a 
minimum,  the  value  and  logical  correctness  of  Mr.  Creswell's 
exhibit  become  sufficiently  evident. 

The  disingenuousness  of  the  Postmaster-Greneral  in  discussing 

16  Dials. 

41  Keys  and  bells. 
1,189  Cells  of  battery. 

1  Recording  register. 

2  Repeaters. 

2  Switch  boards. 

1  Testing  instrument. 

1  Wheatstone's  measuring  instrument.  V 

60  Galvanometers.  y* 
175  Lightning  arresters. 

61  Morse  relays. 
61  Morse  keys. 

2  Police  dials. 

9  Sets  (Morse  key,  relay  and  bell). 

For  the  construction  and  equipment  of  the  above  system  Mr.  Chester  rendered  a 
bill  against  the  City  of  New  York,  as  we  are  officially  informed  at  the  Comptroller's 
office,  of  $850,000. 

Now,  if  625  miles  of  telegraph  wire  costs  $850,000,  then  175,000  miles  would 
cost  $238,000,000. 

625  :  850,000  ::  175,000 :  238,000,000. 

If,  however,  we  suppose  that  the  estimate  which  Mr.  Chester  has  rendered  to  the 
Postmaster-General  is  a  correct  one,  and  that  175,000  miles  of  telegraph  wire  costs 
but  $18,253,625,  then  625  miles  would  cost  only  $65,187. 

175,000:  18,253,625::  625:  65,187. 

In  Mr.  Chester's  estimate  for  constructing  Government  lines,  which  he  proposes 
to  erect  for  $104.30  per  mile  of  wire,  he  includes  75,000  miles  of  poles,  averaging 
33  per  mile,  and  making  a  total  of  2,475,000  poles.  In  the  line  which  he  con 
structed  for  the  City  of  New  York,  for  which  he  charged  $1,360  per  mile  of  wire, 
he  used  only  80  miles  of  poles,  averaging  33  per  mile,  or  a  total  of  2,650  poles. 

For  the  Government  line  the  estimate  embraces  an  average  of  14  poles  per  mile 
of  wire,  and  the  average  cost  of  the  line  per  mile  of  poles  is  $243.38. 

The  line  constructed  for  the  City  of  New  York,  however,  averages  but  a  fraction 
over  two  poles  per  mile  of  wire,  and  the  bill  rendered  for  it  is  at  the  rate  of 
$10,625  per  mile  of  poles.  On  this  basis  the  cost  of  constructing  75,000  miles  of 
line  would  be  $796,875,000. 

"We  leave  the  Postmaster-Greneral  and  Mr.  Chester  to  settle  the  discrepancy 
between  the  two  estimates. 


40 


this  whole  subject  is  also  shown  in  the  manner  in  which  he  refers 
to  a  recent  communication  made  to  the  Postmaster-General  of 
Canada,  by  the  President  of  the  Montreal  Telegraph  Company, 
in  reference  to  the  recent  adoption  in  the  "  Dominion  of  Canada" 
of  a  uniform  tariff  of  "  25  cents  for  ten  words,  and  one  cent  for 
each  subsequent  word,  irrespective  of  place  or  distance" — a  rate 
which  at  first  glance  seems  to  be  very  low,  but  which  on  twenty- 
five  words,  the  proposed  standard  of  the  United  States  Govern-, 
ment,  would  be  40  cents.  From  this  Mr  Ores  well,  as  will  be 
seen  by  reference  to  page  32  of  his  report,  quotes  in  his  argu 
ment  only  so  much  as  passes  for  an  endorsement  of  the  views 
which  he  desires  may  be  accepted  by  Congress  and  the  country, 
and  omits  the  following  of  much  greater  significance:  "It  will 
be  necessary  for  you,  however,  to  remind  the  Postmaster-General 
of  the  United  States  that  though  this  system  has  been  entirely 
successful  here,  it  could  scarcely  be  put  in  operation  in  the 
United  States,  except  under  the  control  of  the  general  Govern 
ment,  owing  to  the  onerous  charges  to  which  the  business  there 
is  subject.  Telegraph  wire  and  all  other  material  used  in  tele 
graphing  are  admitted  into  Canada  free  of  duty,  but  are  subject 
in  the  United  States  to  heavy  duties,  averaging  probably  60  to 
70  per  cent.  The  expenses  of  living  being  greater  in  the  United 
States  than  in  Canada,  salaries  are  necessarily  higher.  Taxation 
is  also  more  burdensome,  and  every  article  in  use  is  dearer.  It 
is  true  that  against  this  must  be  placed  the  more  dense  and  pro 
bably  more  active  population  of  the  United  States,  and  the  larger 
amount  of  business  transacted  ;  but  the  distances  are  so  great 
that  I  doubt  if  a  uniform  25  cent  tariff  ('  i.  e.,  for  10  words,  or  40 
cents  for  25  words')  all  over  the  country  would  maintain  the 
business  in  an  efficient  manner  at  present." 

In  a  subsequent  paragraph  the  writer  expresses  an  opinion 
that  the  Canada  rate — i.  e.,  40  cents  for  25  words — may,  in  the 
course  of  a  few  years  in  the  United  States,  through  an  increase 
of  business,  "become  self-supporting  ;"  but  if  this  should  be  the 
case,  is  it  not  altogether  probable,  in  view  of  the  very  great  re 
ductions  made  by  the  Western  Union  since  1866,  that  such  a 
result  will  be  attained  equally  soon,  if  not  sooner,  by  this 
company  than  by  a  Government  Department,  which  could 
not  see  its  way  to  a  uniform  rate  of  postage  until  Great  Britain 
had  for  more  than  twenty  years  furnished  an  example,  and 


which  even  now  expends,  in  the  city  of  New  Orleans,  five  cents 
in  the  delivery  of  each  single  letter,  which  may  be  carried  from 
any  point  in  the  United  States  to  that  city  for  the  sum  of  three 
cents. 

One  other  matter  made  much  of  by  the  Postmaster-General  in 
his  report  may  also  be  appropriately  noticed  in  this  connection, 
namely — the  alleged  "  enormous  and  dangerous"  abuse  of  the 
"free  message  business."  If  the  Postmaster-General  had  taken 
the  trouble  to  inquire,  instead  of  trusting  hearsay  and  rumor,  he 
would  have  found  that  for  the  last  fiscal  year  the  whole  number 
of  free  messages  transmitted  over  the  wires  of  the  Western 
Union,  would,  if  paid  for  at  regular  rates,  have  returned  the 
sum  of  $750,000.  Such  a  result  on  its  face  is  unquestionably 
somewhat  startling ;  but  its  importance  vanishes  in  view  of  the 
further  statement,  demonstrable  from  the  books  of  the  company, 
that  out  of  this  large  aggregate,  full  70  per  cent,  was  on  account 
of  messages  transmitted  for  railroad  companies,  from  whom  the 
telegraph  was  receiving  an  equivalent  service  in  the  way  of 
maintenance  and  repair  of  its  lines ;  and  that  of  the  remain 
ing  thirty  per  cent,  a  very  large  proportion  was  in  the  nature  of 
compensation  to  hotels,  express  companies,  &c.,  for  the  rent  of 
offices  or  accommodations  afforded  the  company. 

The  statement,  therefore,  made  at  the  commencement  of  this 
review,  that  the  Government  was  undertaking  to  deal  with  a 
subject  of  great  financial,  political  and  social  importance,  without 
being  in  possession  of  either  accurate  or  adequate  information, 
is  abundantly  confirmed  by  the  evidence  which  has  been  cited. 

TELEGRAPH  OWNERSHIP  BY  THE  FEDERAL  GOVERNMENT  INCON 
SISTENT  WITH  THE  THEORY  AND  MAINTENANCE  OF  RE 
PUBLICAN  INSTITUTIONS. 

But  a  more  important  and  conclusive  argument  against  the 
absorption  and  control  of  the  telegraph  by  the  Government  is 
to  be  found  in  the  fact,  that  the  adoption  of  such  a  policy  is  in 
direct  antagonism  with  and  destructive  of  the  fundamental  prin 
ciples  upon  which  the  Government  itself  has  been  established. 
We  are  a  nation  of  forty  millions,  made  up  of  individuals  re 
presenting  almost  every  nationality  and  human  variety,  and 
increasing  at  such  a  ratio  as  will  give  us  at  the  close  of  the  pres- 


42 

ent  century,  or  within  a  period  of  thirty  years,  a  population 
approximating  a  hundred  millions.  The  area  of  country  in 
habited  embraces  extremes  of  over  2,500  miles  in  direct  dis 
tance  ;  while  the  diversity  of  character  and  interest,  among  the 
people  of  the  different  sections,  growing  out  of  differences  of  soil 
climate,  pursuits  and  education  is  even  greater  comparatively 
than  the  distances  by  which  they  are  separated.  Language  ex- 
cepted,  the  different  States  of  Europe  do  not  differ  so  much 
among  themselves  as  New  York  differs  to-day  from  Texas,  or 
South  Carolina  from  California.  The  problem  of  greatest 
moment,  therefore,  presented  to  us  as  a  nation,  is  to  harmonize 
these  varied  and  conflicting  interests,  and  to  unite  them  all  under 
one  firm  and  stable  Government.  The  solution  of  a  similar 
problem  has  been  essayed  before — in  Old  Rome  and  in  modern 
Austria  and  Kussia — under  conditions  of  the  most  centralized 
imperialism ;  but  its  attempt  under  a  republic  with  universal 
suffrage  and  with  no  standing  army  is  something  for  which, 
apart  from  our  own  experience,  there  has  been  no  precedent  for 
success.  \Yhether  those  who  framed  our  Constitution  were  men 
of  superior  wisdom,  and  clearly  foresaw  the  conditions  under 
which  their  work  was  to  be  tested,  is  a  matter  which  is  here  un 
necessary  to  discuss  ;  but  that  they  originated  or  adopted  the 
only  theory  under  which,  through  recognition,  our  past  success 
has  been  mainly  dependent,  seems  certain  ;  and  that  was,  that 
while  it  is  the  essential  feature  of  every  imperial  and  centralized 
government  to  think  for,  act  for,  and,  as  far  as  possible,  direct 
the  pursuits  and  even  the  creeds  and  amusements  of  the  people, 
it  is,  on  the  contrary,  the  essence  of  a  republic,  composed  of  a 
union  of  separate  independent  States,  to  concern  itself  as  little  as 
possible  with  the  internal  affairs  of  the  nation,  and  to  do  nothing 
whatever  for  the  people  which  the  people  are  willing  or  capable 
of  doing  for  themselves.  And  if  this  theory  be  correct,  the 
conclusion  is  irresistible,  that  a  measure  like  the  one  contem 
plated,  of  absorbing  and  operating  the  telegraph  by  the  Govern 
ment,  is  a  step  away  from  republicanism  and  towards  imperial 
ism,  to  be  especially  resisted  by  all  those  who  believe  that 
whatever  there  is  of  danger  threatening  the  vitality  of  our  institu 
tions  is  due  mainly  to  the  tendency  of  the  Federal  Government 
to  enlarge  the  sphere  of  its  functions,  and  to  exercise  powers  that 
were  originally  never  intrusted  to  it. 


43 

INCREASE  OF  FEDERAL  PATRONAGE.  . 

The  increase  of  Federal  patronage  incident  to  the  adoption  of 
the  measure  under  consideration  constitutes  a  further  most  strik 
ing  illustration  in  the  same  direction.  The  number  of  officers 
and  agents,  other  than  soldiers  and  sailors,  and  employes  in 
Government  workshops,  who  are  at  present  in  direct  receipt 
of  compensation  for  services  from  the  National  Treasury 
is  estimated  at  upwards  of  sixty  thousand — the  number  en 
gaged  in  the  Post-office  Department  alone  being  44,655  ;  all  of 
whom,  and  as  many  others  as  by  reason  of  social  relations  have 
a  community  of  interest,  together  with  all  such  as  under  our 
system  of  "  rotation  in  office  "  are  expectants  of  office,  may,  as 
all  experience  shows,  be  relied  on  to  support  any  policy  or  any 
nomination  which  any  administration  controlling  their  official 
existence  may  favor  unrler  the  plea  of  public  utility  or  necessity. 
Of  this  the  story  of  the  "  Plebecite"  in  France;  the  subserviency 
of  all  Federal  officials  prior  to  the  rebellion  to  the  interests  of 
slavery,  and  the  experience  of  all  our  recent  presidential  elections, 
are  in  themselves  sufficient  of  illustration  and  evidence. 

Under  such  circumstances  it  is  now  proposed  to  augment  the 
number  of  recipients  of  Federal  patronage  according  to  the  fol 
lowing  approximative  estimate. 

The  number  of  persons  at  present  in  the  exclusive  service  of 
the  Western  Union  and  other  telegraph  companies,  in  the  capa 
city  of  operators,  clerks,  messengers,  superintendents,  contractors 
and  repairers,  is  over  10,000 — a  number  much  smaller  than  it 
would  be,  were  there  not  such  a  cooperation  of  service  and  pro 
prietorship  between  the  leading  lines  of  railway  and  the  tele 
graph  as  admits  of  the  employment  of  railroad  officials  by  the 
latter,  at  little  or  no  expense,  as  operators  or  repairers.  But 
under  the  proposed  Federal  system  all  of  this  economy  of  co 
partnership  must  disappear,  for,  as  a  recent  report  of  the  Post- 
office  Committee  of  the  House  of  Espresentatives  has  it,  "  the 
functions  of  the  Government  are  exclusive,  and  whenever  it 
formally  undertakes  any  service,  as  proper  to  be  exercised  by 
it,  private  parties  must  necessarily  be  excluded  from  the  per 
formance  of  the  same  service." 

Again,  an  essential  feature  of  the  Government  scheme  is,  that 
the  Post-office  Department  shall,  as  soon  as  practicable,  estab- 


44 

lish  a  telegraph  office  at  every  post-office  in  the  United  States, 
the  gross  receipts  of  which  are  not  less  than  $100  per  annum,  to 
be  accompanied  by  a  free  delivery  by  carriers  of  all  messages  with 
in  a  circuit  two  miles  in  diameter ;  which  free  delivery,  in  the  case 
of  letters,  now  pertains  to  less  than  one  hundred  offices  in  the 
whole  country.  The  number  of  post-offices  whose  annual  receipts 
are  of  the  amount  above  specified  is  at  present  about  12,000  ;  and 
as  it  is  not  unreasonable  to  estimate  that  if  the  average  number 
of  Federal  telegraphic  employes,  at  the  outset,  was  not  two  to 
each  office — an  operator  and  a  messenger — it  would  not  be  long 
before  at  least  that  number  would  be  regarded  as  the  lowest 
standard  of  Governmental  necessity. 

That,  in  the  course  of  time,  the  office  of  postmaster  and  tele 
graph  operator  would,  in  many  small  towns,  come  to  be  filled 
by  one  and  the  same  person,  thus  reducing  the  number  of  addi 
tional  employes  in  such  places  to  a  messenger  and  occasional 
repairer,  is  not  unlikely  ;  but  that,  in  view  of  the  pressure 
incident  to  American  politics  to  create  and  maintain  offices  for 
political  reasons,  any  such  practice  is  likely  to  become  general, 
is  something  altogether  improbable ;  and,  as  showing  further 
how  unmistakably  the  drift  of  political  management  is  at 
present  in  respect  to  such  matters,  the  following  incident  may 
be  related :  During  the  past  summer  an  application  was  made 
to  one  of  the  bureaus  of  the  Government,  having  in  charge  a 
branch  of  manufacturing,  to  purchase  and  introduce  a  new 
labor-having  machine,  which  private  enterprise  was  everywhere 
adopting.  The  proposition  was  declined  for  the  very  same 
reason  that  it  was  made — namely,  that  it  would  occasion  a  reduc 
tion  in  the  number  of  those  receiving  employment,  the  officer  in 
charge  adding  that  the  policy  forced  upon  him  was  to  employ 
as  many,  arid  not  as  few  men  as  possible,  and  that  any  deviation 
from  it  would  occasion  him  annoyance,  and  possibly  a  forfeiture 
of  his  situation. 

It  will  also  readily  suggest  itself  that  whatever  is  likely  to  be 
gained  from  the  employment  of  postmasters  in  small  towns  as 
telegraph  operators,  is  likely  to  be  far  more  than  compensated 
by  the  very  great  increase  of  force  necessary  to  meet  the  require 
ments  contingent  on  the  expected  increase  of  business  under 
Government  rates  and  management.  This  increase  the  Post 
master-General  thinks  would,  after  one  year,  be  from  13,700,000 


45 

messages  (the  present  estimate)  to  30,000,000 ;  Mr.  Washburn 
and  others  say  40,000,000  ;  while  the  experience  of  the  Western 
Union  shows  that  for  every  additional  400  messages  per  day 
passing  between  any  two  points  there  must  be  an  additional 
wire,  and  an  entire  new  set  of  operators  and  messengers.* 

It  is,  therefore,  altogether  reasonable  to  assume  that,  if  the 
Post-office  Department  takes  possession  of  and  directs  the  tele 
graph  service  of  the  country  in  the  manner  proposed,  the  num 
ber  of  additional  offices  which  will  at  once,  or  in  a  short  time, 
be  added  to  the  roll  of  Federal  patronage  will  equal  or  exceed 
25,000.f  And  if  the  theory  of  the  Government  be  correct,  that 
the  people  need  the  telegraph,  and  that  it  is  essential  to  civiliza 
tion  and  the  spread  of  intelligence  that  they  should  everywhere 
enjoy  its  use  cheaply,  there  can  be  no  good  reason  assigned 
why  it  should  not  be  made  co-extensive  with  the  Post-office ; 

*  The  largest  business  ever  done  in  one  day  at  the  general  office  of  the  "Western 
Union  Company  in  the  City  of  New  York  was  on  November  llth,  1872,  when 
21,132  messages  and  95,490  words  of  press  matter  were  sent  aud  received. 
Estimating  the  latter  at  30  words  per  message,  the  aggregate  would  represent  a 
total  of  24,315  messages. 

Sixty-two  wires  were  employed  in  doing  this  work— six  of  them  being  doubled  by 
the  use  of  Stearns'  Duplex  Telegraph,  making  an  average  of  392  messages  per  wire. 
The  wires  were  all  worked  to  their  full  capacity  until  very  late  at  night,  and  many 
of  them  all  night.  The  weather  was  fine  and  the  lines  in  excellent  order,  so  that 
the  work  done  may  be  regarded  as  practically  exhibiting  the  maximum  capacity 
of  the  wires  under  the  most  favorable  conditions. 

f  "  The  supposed  economy  of  uniting  the  two  services  will  probably  be  found  in 
practice  in  a  large  measure  delusive.  A  few  clerks  and  letier-carriers  in  the  Post- 
office  may  be  able  to  take  upon  themselves  additional  duties,  but,  as  a  general  rule, 
it  will  be  found  in  this,  as  in  other  cases,  that  any  additional  work  requires  addi 
tional  workmen.  A  clerk  cannot  be  assorting  the  mails  and  receiving  telegrams 
at  the  same  time :  the  two  functions  will  unavoidably  interfere  with  each  other. 
Neither  can  much  economy  be  effected  in  the  matter  of  rents." —Report  of 
Committee  on  Post-offices  and  Post-roads,  House  of  Representatives,  1869. 

Mr.  Palmer,  of  the  Select  Committee  of  the  House  of  Representatives,  in  a 
report  made  July,  1870,  estimated  that  the  number  of  additional  employes  which 
would  be  required  by  the  Government  to  manage  the  telegraph  at  from  20,000  to 
25,000.  Mr.  Beck,  of  the  Committee  on  Ways  and  Mean',*  in  January,  1872,  report 
ed  to  the  House,  as  the  result  of  his  investigations,  that  he  was  satisfied  "  it  would 
require  not  less  than  25,000  additional  Government  officials  to  manage  and  control 
the  telegraph  system  of  the  United  States  under  the  bill  of  General  Washburn, 
and  the  number  would  increase  every  year." 

*  Beck  was  on  Washburn's  Special  Committee. 


46 

or  why  a  post-office  district  whose  annual  receipts  are  $100 
should  have  a  wire  and  an  operator,  and  another  contiguous 
district,  whose  receipts  are  only  a  little  less,  should  be  deprived 
of  similar  privileges.  The  plea  that  one  office  would  be  remu 
nerative  and  the  other  would  not  could  not  be  consistently 
offered,  for  in  neither  case  would  the  receipts  from  business  be 
likely  to  defray  more  than  a  fraction  of  the  expenditures  ;  and 
the  fundamental  idea,  moreover,  with  which  the  Government 
enters  upon  its  scheme  is,  that  necessities,  and  not  expenditures, 
are  to  have  the  prime  consideration.  The  scheme  of  telegraphic 
ownership  once  entered  upon,  the  logic  of  the  case,  and  the 
desire  of  every  member  of  Congress  to  please  his  constituents, 
would  therefore  soon  lead  to  the  extension  of  the  wires  to  every 
post-office,  except  the  very  smallest,  and  consequently  augment 
the  number  of  new  officials  very  far  beyond  the  number  already 
indicated. 

Does  it  not  also  occur  to  the  Postmaster-General  and  others, 
who  with  him  are  so  strenuous  for  the  Government  appropria 
tion  of  the  telegraph,  that  every  argument  they  can  bring  for 
ward  in  support  of  their  pleaded  necessity,  namely,  protection 
against  corporate  monopolies,  the  urgency  of  cheaper  service,  the 
requirements  of  the  State  in  time  of  war,  can  be  made  to  justify 
equally  the  Government  appropriation  of  the  business  of  the 
railroad  and  express.  Nay,  more,  do  we  not  find  that  in  Conti 
nental  Europe,  whose  experience  in  respect  to  the  telegraph  is 
commended  to  us  for  imitation,  that  the  railroad  and  express, 
equally  with  the  telegraph,  have  passed  under  the  control  or 
ownership  of  the  Government,  and  that  the  reasons  which  have 
influenced  to  such  action  in  the  one  case  have  been  regarded  as 
equally  applicable  to  the  others.  In  1869  the  Government  of 
Great  Britain  took  possession  of  the  telegraph,  and,  as  a 
sequence  of  such  policy,  a  Committee  of  Parliament,  within  a 
very  recent  period,  have  reported  in  favor  of  a  similar  ownership 
by  the  Government  of  all  the  railways  of  the  United  Kingdom. 

THE  EXTENT    OF    GOVERNMENT  INTERFERENCE    INVOLVED     IN 
TELEGRAPH  OWNERSHIP. 

But  there  are  other  aspects  of  the  case  which,  when  subjected 
to  examination,  would  seem  to  still  less  commend  themselves  to 
the  approbation  of  the  public. 


47 

The  proposed  Governmental  system,  as  has  already  been 
pointed  out,  makes  all  other  telegraph  competition  unlawful, 
and  prescribes  punishment  by  a  fine  for  every  offense  of  trans 
mitting  or  receiving  messages  without  official  permission.  Now, 
when  we  consider  that  within  the  circles  of  population  and  busi 
ness  which  employ  the  telegraph,  its  use  is  daily  becoming  more 
common  and  familiar;  that  besides  the  public  offices  for  the 
transmission  of  messages  from  town  to  town  and  from  city  to 
city,  the  telegraphic  instrument  has  become  the  indispensable 
adjunct  of  every  police  station,  fire-alarm,  stock  and  produce  ex 
change,  and  underwriters'  agency  for  the  reporting  and  relief  of 
vessels ;  that  in  the  free  hand  of  railway  officials  it  regulates  the 
movement^of  every  train,  and  in  those  of  merchants  and  manu 
facturers  it  communicates  between  office  of  sale  and  places  of 
production  ;  that  it  is  already  sold  as  a  toy  for  children  to  play 
with  it,  and  that  the  improvements  of  every  year  tend  more  and 
more  to  simplify  and  extend  its  operation  and  agency,  does  it 
not  become  obvious  that  the  proposed  Government  control  of 
such  an  instrumentality  embraces  a  great  many  more  interests 
than  those  represented  by  the  Post-office  ?  and  further,  that  to 
keep  that  control  exclusive  will  require  a  system  of  law  and 
espionage  so  foreign  to  our  people  that  practically  it  can  never 
be  executed?  Indeed,  it  is  much  the  same  thing  as  if  the  Gov 
ernment,  for  the  reason  that  it  desired  to  use  the  power  of  steam 
for  the  exclusive  transmission  of  the  mails,  should  make  its  use 
for  all  other  purposes  a  matter  subject  to  official  permission.  It 
is  possible  that  no  injury  might  actually  result  therefrom  to  the 
business  of  the  country,  but  it  is  certain  that  such  a  system  would 
engender  complications  and  a  spirit  entirely  foreign  to  the  atmos 
phere  of  this  last  half  of  the  nineteenth  century.  As  a  more  speci 
fic  illustration  to  the  same  effect,  take  the  so-called  "gold  and 
stock"  telegraph  of  the  city  of  New  York.  Here  is  a  system  by 
which  upwards  of  1,000  separate  offices  receive  uninterrupted 
messages  during  business  hours  relative  to  prices  and  sales,  the 
telegraph  company  furnishing  the  operators  and  the  instruments, 
and  the  officers  of  the  "Stock  Exchange"  the  information.  The 
Government,  however,  under  the  new  system,  would  furnish  both 
the  information  and  the  instrumentality,  interpose  its  official  re 
presentative  into  the  center  of  the  financial  market,  and  make 


48 

the  character  and  quality  of  the  information  transmitted  de 
pendent  on  other  considerations  than  the  business  interest  imme 
diately  interested.  If  it  be  said  that  in  Europe,  where  the  tele 
graph  is  a  Government  monopoly,  none  of  these  complications 
and  embarrassments  to  business  have  been  experienced,  it  may 
be  replied  that  in  London  the  first  effect  of  the  Government 
possession  of  the  wires  was  to  break  up  the  use  of  the 
telegraph  by  the  Stock  Exchange ;  and  that,  furthermore, 
nowhere  in  Europe,  and  not  even  in  London,  is  there  any  such 
use  made  of  the  telegraph  as  has  come  to  prevail  in  the  United 
States. 

A   GOVERNMENT  SYSTEM  OF    TELEGRAPH   PROVOCATIVE   OF  ES 
PIONAGE  AND   INTERFERENCE   WITH  THE   RIGHTS  OF 
CITIZENS. 

The  probability  if  not  necessity,  of  a  system  of  espionage,  in 
order  to  make  the  proposed  exclusive  control  of  the  telegraph  by 
the  Government  effective,  has  been  touched  upon  ;  but  the  sub 
ject  is  too  important  to  be  dismissed  with  an  allusion.  Necessa 
rily  the  possession  of  the  telegraph  brings  those  who  manage  and 
operate  it  into  very  close  connection  with  the  finances,  the  com 
merce,  the  press,  the  politics  and  the  social  relations  of  the 
country.  Under  the  present  system  the  pecuniary  interests  of 
the  companies  imperatively  restrain  them  from  favoring  any 
party  or  interest.  In  addition  to  this  there  is  always  the  im 
pending  peril  and  threat  of  heavy  money  penalties,  recoverable 
at  law,  for  any  breach  of  trust  or  neglect  of  duty ;  and  how 
often  judgment  is  rendered  for  errors  acknowledged  by  the 
complainants  to  be  unintentional  the  records  of  the  courts  abun 
dantly  testify.  How  honorably,  furthermore,  the  existing  com 
panies  have  discharged  their  trust  to  the  public  is  proved  by 
the  circumstance  that,  among  all  the  reasons  advanced  for  a 
change  of  system,  "  breach  of  faith  "  has  not  been  specifically 
cited  in  a  single  instance.  A  Governmental  system,  on  the 
contrary,  which,  as  in  the  Post-office,  will  assume  no  responsi 
bility  for  the  dishonesty,  incompetence  and  mistakes  of  its 
agents,  and  one,  moreover,  in  which  its  agents  know  that  their 
station  and  salary,  if  not  their  permanance  in  office,  is  more 
dependant  on  the  favor  of  superiors  than  on  good  behavior,  can 


but  be  provocative  of  carelessness  and  indifference.  Differing 
from  communications  by  mail,  there  can  be  no  secrets,  except 
through  the  use  of  ciphers,  to  those  who  operate  the  telegraph, 
and  when  responsibility  is  lessened  the  temptation  to  violate 
privacy  will  most  assuredly  be  increased.  Are  the  American 
people  ready  to  accept  the  idea  that  all  that  passes  over  the 
wires,  both  at  the  time  of  transmission*  and  ever  thereafter,  is 
liable  to  be  inspected  and  used  by  the  changing  officials  who 
may  fill  the  departments  at  Washington — for  a  paragraph  in  the 
Government  bill  reads:  "  that  the  originals  of  all  messages  shall 
be  transmitted  to  Washington,  to  be  preserved  for  reference?"  Are 
the  public  willing  to  place  farther  facilities  in  the  way  of  the 
exercise  of  the  prerogative  already  claimed  to  be  possessed  by 
committees  of  Congress,  of  taking  possession  and  using  such  re 
cords — a  claim  noways  different  in  principle  from  the  opening 
and  reading  of  letters  intrusted  to  the  Post-office — and  for  the 
resistance  to  which  the  manliness  and  integrity  of  the  officers  of 
the  existing  telegraphs  have  as  yet  proved  the  only  effectual  ob 
stacle  ?  On  the  Continent  of  Europe  there  is  not  a  government 
which  does  not  regard  the  telegraph  as  an  adjunct  of  the  police, 
and  which  does  not  claim  and,  probably,  exercise  the  power  of 
interfering  with  the  transmission  of  any  message  which  it  may 
regard  as  prejudicial  to  its  own  interests  ;  and  even  in  England, 
liberal  as  her  government  is  in  comparison  with  those  upon  the 
Continent,  the  right  to  delay  or  withhold  telegrams  for  the 
press  has  been  claimed  and  exercised  by  her  officials  within  a 
very  recent  period.  It  should  not  be  forgotten,  furthermore, 
that  in  the  period  of  anti-slavery  agitation  the  action  of  United 
States  officials  was  precisely  similar,  in  respect  to  the  transmis 
sion  and  delivery  of  the  so-called  "  Abolition  Documents"  by 
the  mail,  and  that  this  action  was  justified  and  defended  by 
those  who  were  then  in  control  of  the  Post-office  Department ; 
and  also  that  within  the  last  month  we  have  had  the  curious 
spectacle  of  the  Postmaster-General — an  American  lawyer — 
asking  the  Attorney -General  of  the  United  States — another 
lawyer — whether  it  be  permissible  for  postmasters  to  open 
sealed  letters,  and  detain  them  on  suspicion  that  their  contents 
were  made  up  of  something  morally  objectionable.  One  is 
almost  tempted  to  ask  whether  the  official  making  the  inquiry 


50 

referred  to,  knows  that  we  are  living  in  the  nineteenth  century, 
and  that  the  form  of  government  he  helps  to  administer  is  a 
Kepublic  and  not  a  despotism  ? 

la  an  exciting  political  contest,  like  that  which  the  country  has 
just  passed  through,  can  it  be  doubted  that  the  telegraph,  if  in 
possession  of  the  Government,  would  be  used  for  political  pur 
poses — for  the  perpetuation  of  its  own  power,  or  for  the  assist 
ance  of  its  friends.  And  even  if  this  should  not  be  the  case, 
and  the  Government  should  keep  itself  immaculate,  the  very  fact 
that  very  great  facilities  for  the  use  of  the  telegraph  for  partizan 
purposes  existed,  and  that  detection  was  almost  impossible, 
would  of  itself  be  provocative  of  such  a  distrust  as  would  limit 
the  use  of  the  wires  for  political  correspondence  almost  exclu 
sively  to  those  in  sympathy  with  the  then  existing  administra 
tion. 

There  is  still  another  point  in  this  connection  well  worthy 
of  public  consideration.  Suppose,  in  the  heat  and  excite 
ment  of  a  national  political  contest,  in  which  the  result  was 
acknowledged  to  be  close  and  doubtful,  a  general  suspicion 
should  be  excited — groundless  or  otherwise — that  the  telegraph 
had  been  or  was  likely  to  be  used  by  an  administration 
for  its  own  political  advantage,  would  not,  from  that  very 
moment,  the  utility,  nay,  even  the  continuance  of  the  system 
as  a  whole,  be  impaired  or  totally  interrupted  ?  A  fine  copper 
wire,  carried  from  the  line  down  a  crack  of  the  telegraph 
pole  to  the  ground,  effectually  interrupts  the  current ;  trees  can 
fall  conveniently  in  the  woods  in  many  different  localities  ;  and 
although  there  are  instruments  which  will  enable  a  boy  sitting 
in  a  central  office  to  determine  within  a  half  a  mile  the  loca 
tion  of  a  break  in  a  line  of  telegraphic  wire  stretching  over 
a  distance  of  from  two  to  three  hundred  miles  and  upwards, 
there  can  be  little  information  got  out  of  such  instruments  when 
nothing  remains  of  a  circuit  but  numerous  detached  fragments. 
At  the  outbreak  of  the  war  in  1861  it  will  be  remembered  that 
the  telegraph  and  express  continued  to  operate  in  the  hostile  dis 
tricts  of  the  South  long  after  the  Port-office  had  ceased  to  dis 
charge  its  functions ;  and  simply  because  it  was  understood  that 
the  agency  in  one  case  was  Federal  and  official,  and  in  the  other 
private  and  in  fere  nti  ally  neutral. 


51 


FEDERAL    TELEGRAPH    OWNERSHIP    AND  CIVIL   SERVICE 
REFORM. 

"  Civil  service  reform"  and  the  restraint  of  great  "monied 
monopolies"  are  things  much  talked  of  late,  as  among  the  neces 
sities  of  our  national  situation  ;  but  what  civil  service  reform  or 
any  other  beneficial  reform  is  to  be  expected  in  national  affairs, 
if  the  Government  is  to  be  invested  with  the  reach  of  power  over 
the  business,  wealth,  politics  and  press  of  the  country,  as  this 
scheme  contemplates?  Or  what  the  restraining  influence  on 
monopolies,  when  the  Government  itself  has  become  the  mono 
polist,  and  has  added  to  the  patronage  which  it  now  possesses 
all  that  pertains  to  the  corporations  which  it  proposes  to  digest 
and  assimilate?  Is  it  too  much  to  affirm  that  an  administration 
once  in  power,  with  such  influences  at  its  control  and  disposi 
tion,  could  make  its  tenure  of  existence  commensurate  only  with 
its  inclination  ? 

The  true  idea  of  civil  service  reform — the  only  one  which  will 
ever  prove  truly  effective — is  to  be  found  in  carrying  out  the  ori 
ginal  theory,  that  the  Federal  Government  should  be  restricted  to 
the  most  limited  sphere  of  action  consistent  with  its  own  safety 
and  existence,  and  in  reducing  the  patronage  at  its  disposal  to  the 
minimum;  and  not  in  first  increasing  the  amount  of  patronage 
and  then  making  rules  to  prevent  abuse  in  its  distribution — a 
process  very  like  praying  to  be  led  into  temptation  and  to  be 
delivered  at  the  same  time  from  its  influence.  And  yet,  as 
showing  to  how  small  an  extent  this  idea  finds  popular  accept 
ance,  we  have  the  Postmaster-General  of  the  United  States  urg 
ing,  as  one  principal  reason  why  the  Post-office  should  absorb  the 
telegraph,  that,  if  it  is  not  done,  the  telegraph,  under  private 
management,  will  absorb  the  Post-office.  The  assumption 
of  the  Postmaster-General  is  in  the  first  place  wholly 
unwarranted,  for  all  the  evidence,  both  in  this  country  and  in 
England,  is  to  the  effect  that  correspondence  by  mail  increases 
nothwithstanding  the  increase  of  telegraphic  facilities,  and 
from  the  nature  of  the  case  necessarily  must  do  so ;  the  Western 
Union  Company,  for  example,  notwithstanding  its  unsurpassed 
facilities  for  using  the  wires,  being  the  greatest  single  customer 
for  postage  stamps  in  the  United  States;  and  secondly,  if  the 
contrary  were  true,  it  does  not  seem  to  have  occurred  to  the 


52 

Postmaster-General,  that  to  most  people  who  have  studied  the 
theory  of  our  Government,  and  the  dangers  to  which  it  is  ex 
posed,  any  cause  occurring  naturally  which  would  relieve  the 
Government  from  the  Post-office,  with  its  six  million  annual 
deficit  and  forty-four  thousand  officials,  would  be  a  thing  to  be 
rejoiced  over  and  not  one  to  be  deprecated. 

THE    WESTERN    UNION    COMPANY  AND    THE    SIGNAL    SEEVICE 

BUBEAU. 

How  strong  is  the  tendency  on  the  part  of  Government  offi 
cials,  disconnected  with  the  business  of  the  country,  and  not  de 
pendent  on  subserving  the  interests  of  the  public  for  their  con 
tinuance  in  office,  to  exercise  power  in  an  arbitrary  and  unwar 
ranted  manner,  is  strikingly  exemplified  in  the  course  recently 
pursued  by  what  is  known  as  the  ''Signal  Service  Bureau"  of 
the  Government.  This  service,  as  first  projected,  was  in 
the  nature  of  a  scientific  experiment,  to  which  the  Western 
Union  Telegraph  Company  freely  lent  its  resources  in  the  ab 
sence  of  any  stipulated  compensation,  at  a  time  when  Congress 
had  not  sufficient  faith  to  make  an  appropriation  for  the  Bureau 
adequate  to  its  necessities.  As  a  scientific  experiment,  more 
over,  notwithstanding  its  results  of  interest  and  value,  it  mainly 
still  is;  and  yet  one  of  the  chief  arguments  advanced  in  support 
of  the  Federal  ownership  of  the  telegraph  (we  quote  the  exact 
words  of  an  official  report)  is,  that  "  the  interests  of  the  Govern 
ment  demand  the  entire  control  of  the  wires  for  the  proper  trans 
mission  of  the  weather  reports  and  other  public  business;"  thus 
conclusively  showing  that  in  the  thoughts  of  Federal  officers 
the  old  monarchical  principle  has  attained  full  recognition, 
namely — that  the  interests  of  the  rulers  are  to  be  considered 
first,  and  those  of  the  people  last;  and  also  that,  in  the  judgment 
of  these  same  persons,  it  is  of  great  deal  more  importance  to  send 
over  the  country  by  the  telegraph,  in  extended  prolixity,  the 
latest  statements  of  what  the  weather  was  yesterday  and  what 
the  wind  is  likely  to  be  to-day,  taking  possession,  with  inflexible 
routine,  if  need  be,  of  the  only  wire  which  conflagration,  flood 
or  tempest  have  left  serviceable,  than  that  the  great  movements 
of  commerce,  of  business  and  of  society,  which  control  prices, 
determine  production  and  regulate  the  daily  life  of  the  nation, 


53 

should  be  allowed  to  pulsate  throughout  the  whole  extent  of  a 
continent  with  the  minimum  of  delay  and  interruption.*  (For 
further  details  of  the  relations  of  the  Signal  Service  Bureau  to 
the  telegraph,  reference  is  mads  to  the  appendix  to  this  report 
marked  G.) 

THE  RIGHTS   OF  STATES  UNDER  A  FEDERAL   MONOPOLY  OF  THE 

TELEGRAPH. 

Another  question  of  interest  sure  to  grow  out  of  the  absorption 
of  the  telegraph  by  the  Government  would  b3  that  of  the  tenure 
and  conditions  under  which  real  property,  taken  from  the  several 
existing  telegraph  companies,  would  be  held  by  Federal 
authority  within  the  territorial  limits  and  sovereignty  of  the 
different  States  in  which  such  property  may  bo  located.  The 
17th  clause^of  the  8th  section  of  the  1st  article  of  the  Constitu 
tion  of  the  United  States  provides  that  Congress  shall  have 
power  to  "  exercise  exclusive  legislation  "  over  the  seat  of  Govern- 

*  As  the  relations  past  and  present  of  the  Signal  Service  Bureau  with  the  West 
ern  Union  Telegraph  Company  are  being  used  to  excite  prejudice  against  the 
management  of  the  telegraph  system  of  the  country  by  private  agencies,  attention 
is  here  asked  to  the  following  succinct  statement  of  the  exact  facts  copied  from  the 
Journal  of  the  Telegraph: 

The  Signal  Service  business  was  new  and  peculiar.  It  required  the  exclusive 
occupation  of  from  twenty  to  thirty  of  the  principal  circuits,  varying  in  length  i'rom 
250  to  2,50)  miles,  three  times  in  each  twenty-four  hours,  and  the  dropping  of  the 
messages  transmitted  thereon  at  each  signal  station.  In  addition  to  the  occupa 
tion  of  these  important  circuits,  extending  throughout  the  United  States,  for  the 
transmission  of  the  weather  reports,  the  Chief  Signal  Officer  represented  that  it 
was  necessary  that  he  should  have  at  his  disposal  special  circuits  between  Wash 
ington  and  New  York,  Washington  and  Chicago,  and  Washington  and  New 
Orleans.  These  circuits  were  required  to  be  connected  with  the  Signal  Office  at 
7.45  A.  M.,  4.45  P.  M.,  and  11.45  P.  M.,  daily,  and  at  such  other  times  as  the 
Signal  Officer  should  call  for  them.  The  Signal  Service  had  been  in  operation  but 
a  short  time,  however,  when  it  was  ascertained  that  these  special  circuits  were 
being  put  to  other  uses  than  the  correction  of  errors  in  reports  and  other  matters 
connected  with  their  transmission.  It  was  found  that  they  were  being  taken  for 
purposes  of  display,  as  well  as  for  the  obtaining  of  trivial  information,  such  as  the 
hours  for  the  departure  of  trains,  the  hiring  of  operators,  the  procurement  of  vac 
cine  matter  for  the  prevention  of  small-pox,  &c.,  &c.,  during  the  most  crowded 
hours  of  the  day,  when  they  were  most  useful  to  the  public,  and,  therefore,  most 
valuable  to  the  companjr. 

The  authority  of  the  Postmaster-General  to  fix  the  telegraphic  charges  for  Gov 
ernment  messages,  under  the  Act  of  1866,  was  not  denied ;  but  the  company  did  not 
admit  the  right  of  that  officer  to  contiol  its  wires,  to  direct  when  and  how  circuits 
should  be  made  up,  and  to  dictate  the  routes  by  which  messages  should  be  sent  to 
their  destination.  Nor  did  it  admit  the  right  of  any  officer  of  the  Government  to 
order  its  operators  to  open  their  offices  at  unusual  and  inconvenient  hours  in  the 
morning,  and  to  keep  them  open  at  night  until  the  permission  of  some  other 
Government  official  to  close  them  had  been  obtained.  The  position  of  the 


54 

ment,  and  a  "  like  authority  over  all  places  purchased  ly  the 
"  consent  of  the  Legislature  of  the  State  in  which  the  same  shall  be, 
"  for  the  erection  of  forts,  magazines,  arsenals,  dockyards  and 
other  needful  buildings;"  and  in  accordance  with  this  provision 
the  Federal  Government  has  never,  heretofore,  except  in  the 
exercise  of  "  war  powers,"  assumed  ownership  or  exclusive  con 
trol  over  any  property  within  any  State,  except  by  a  consent 
of  the  Legislature  of  such  State,  formally  sought  and  given. 
It  is  also  important  to  note  that  the  words  "  ly  the  con 
sent  of  the  Legislature  of  the  State  in  which  the  same  shall  &e,"  were 
unanimously  inserted  by  the  Federal  Constitutional  Convention 
on  motion  of  Eufus  King,  of  Massachusetts,  and  Gouverneur  Mor 
ris,  of  Pennsylvania,  to  obviate  an  objection  raised  by  Elbridge 
Gerry,  of  Massachusetts,  that  without  them  the  clause  would 
confer  a  power  upon  the  central  Government  which  might  prove 
perilous  to  the  rightful  sovereignty,  within  their  sphere,  of  the 
States  ;  and  that  Mr.  Madison,  in  one  of  the  numbers  of  the 
"  Federalist,"  subsequently  called  attention  to  the  great  value  of 
this  clause,  as  a  check  on  the  possible  encroachment  of  the 
Federal  Government  on  the  powers  of  the  States. 

Now,  in  all  the  reports  and  bills  advocating  or  providing  for 
the  absorption  of  the  telegraph  by  the  Government,  it  seems  to 
be  taken  for  granted  that  the  Federal  authorities  are  to  be  ern- 

company  upon  this  point  was  clearly  and  unmistakably  set  forth  by  the  president 
of  the  company  in  the  proceedings  of  the  Committee  on  Appropriations  at  Wash 
ington,  March  29,  1872,  in  the  following  words,  which  we  quote  from  the  report  of 
that  committee  : 

"  I  have  conceded  the  right  of  the  United  States  to  require  anything  to  be  sent 
by  telegraph  to  anybody,  anywhere  within  the  reach  of  our  wires,  and  at  any  time 
that  our  offices  are  accessible  for  that  purpose.  I  distinctly  disclaimed  the  position 
that  there  is  anything  about  the  messages  of  the  Signal  Service  that  excludes  them 
from  the  provisions  of  the  Act  of  1866.  The  Chief  Signal  Officer  may  file  in  the 
Western  Union  Telegraph  Office  any  number  of  messages  directing  them  to  be 
sent  to  as  many  stations  as,  in  his  judgment,  it  is  necessary  for  the  public  service 
that  they  should  reach ;  and  il  is  competent  for  the  Postmaster-General  to  fix  a  rate 
to  every  station  in  the  United  States  to  be  applied  to  that  business ;  but  then  and 
there  his  authority  in  the  premises  ceases.  I  take  those  messages  and — exercising 
the  utmost  diligence,  and  being  the  best  judge  as  to  which  wires  I  shall  employ  to 
do  the  work,  and  what  is  the  most  expeditious  route  between  the  initial  and  the 
terminal  stations,  or  as  to  how  many  of  several  routes  shall  together  be  employed 
for  that  purpose — I  must  deliver  these  messages  at  their  destinations  But  that 
we  shall  keep  an  office  open  all  night  at  some  places  and  open  half  the  night  at 
other  places,  and  shall  open  one  at  five  o'clock  in  the  morning,  and  another  at  six, 
and  another  at  seven,  in  order  that  they  may  all  be  in  telegraphic  communication 
at  the  same  instant,  and  that  we  shall  connect  tlie  War  Department  or  the  Signal 
Office  with  our  main  office,  and  permit  its  officers  to  control  our  wires,  is  a  right 
which,  with  great  respect  to  the  Postmaster-General,  I  deny  to  have  been  con 
ferred  under  this  Act." 


65 

powered  by  Congress,  not  only  to  abrogate  at  once  all  State 
charters  under  which  all  telegraph  companies  are  now  organized, 
but  also,  and  irrespective  of  State  permission,  to  exercise  absolute 
control  and  ownership,  with  a  concurrent  exemption  from  all 
taxation,  over  all  real  property  at  present  belonging  to  existing 
telegraph  companies,  and  wherever  situated.  And,  if  this  as 
sumption  be  correct,  it  follows  that  either  the  Federal  Govern 
ment  is,  at  this  time,  proposing  to  itself  the  alienation  and 
transfer  from  State  jurisdiction  of  extensive  properties  in  a 
manner  not  authorized  by  the  Constitution,  contrary  to  all  pre 
cedent,  and  wholly  subversive  of  State  sovereignty  as  heretofore 
recognized  ;  or,  if  the  contrary  be  true,  and  no  such  procedure 
is  contemplated,  that  no  system  of  Government  telegraph  can 
practically  go  into  operation  without  the  consent  of  the  several 
States;  and  that  the  opposition  of  even  one  State  would  be 
sufficient  to  prevent  the  scheme  from  becoming  uniform.  And, 
as  appertaining  to  this  matter,  attention  is  here  asked  to  the 
circumstance  that,  since  the  commencement  of  the  present 
session  of  Congress,  a  bill  has  been  introduced  into  the  Senate 
which  proposes  to  transfer  the  power  of  condemning  private 
property  for  public  ("  Federal ")  uses  from  the  Legislatures  of  the 
separate  States  to  the  Federal  courts,  and  so  relieve  the  general 
Government  from  the  humiliating  necessity  they  are  now  under 
of  asking  State  authority  for  leave  to  appropriate  State  property. 

THE  REAL  ISSUE  INVOLVED  IN  THE  PROPOSITION  OF  FEDERAL 
INTERFERENCE  WITH  THE  TELEGRAPH. 

Whether,  therefore,  under  the  scheme  of  Federal  interference, 
direct  or  indirect,  the  people  are  likely  to  obtain  more  efficient 
and  cheaper  telegraphic  facilities ;  whether  it  is  a  necessity 
for  the  Signal  Service  to  control  exclusively  the  wires  for  its 
own  purposes,  or  whether  the  interests  of  any  particular 
company  are  likely  to  be  injuriously  affected,  are  all  alike  ques 
tions  of  minor  importance ;  inasmuch  as  the  real  question  in 
volved,  the  one  before  which  all  others  shrink  into  comparative 
insignificance,  is — Will  the  people  consent  to  the  inauguration  of 
a  policy,  on  the  part  of  the  Federal  Government,  which  revives 
the  old  Mediaeval  doctrine  of  the  necessity  of  State  interference 
with  the  pursuits  and  business  of  the  people,  and  every  step  in 


56 

the  carrying  out  of  which  is  a  departure  from  Kepublicanism 
and  an  approach  towards  despotism  and  monarchy  ? 

THE  TELEGRAPH  AND  THE   ASSOCIATED   PKESS. 

One  point  more  in  connection  with  this  review  needs  to  be 
noticed,  and  that  is  the  assertion  that  the  Western  Union  Tele 
graph  Company,  through  its  alliance  with  the  "  Associated 
Press,"  constitutes  a  monopoly  obstructive  of  newspaper  enter 
prise  and  the  free  dissemination  of  news,  and  as  such  ought 
to  be  abated.  How  entirely  unfounded,  however,  this  is  will 
at  once  appear  from  the  following  statement : 

The  "  Associated  Press,"  in  its  inception,  was  an  organization 
having  its  headquarters  in  the  City  of  New  York,  and.  composed 
of  representatives  of  the  then  principal  newspapers  of  that  city, 
for  the  purpose  of  combining  their  respective  energies  and 
diverse  facilities  for  the  collection  of  news.  This  was  many 
years  ago,  and  in  the  days  of  the  infancy  of  the  telegraph.  Sub 
sequently,  as  railroad  and  telegraph  facilities  extended,  and  as 
the  benefit  of  cooperation  became  clearly  apparent,  a  series  of 
similar  organizations  were  formed — East,  South,  West,  and  on 
the  Pacific* — each  one  independent,  but  cooperating  in  the  col 
lecting,  exchanging  and  selling  of  news.  In  each  case,  further 
more,  it  was  a  matter  of  no  difficulty  in  the  outset,  for  any 
journal,  willing  to  incur  its  proportion  of  expense,  to  become  a 
member  of  one  of  these  organizations ;  but  afterwards,  as  the 
privilege  of  membership  became  valuable,  the  several  organi 
zations,  of  their  own  volition,  and  with  a  view  to  their  own  in 
terests,  imposed  restrictions  on  membership. 

But  with  all  this  the  telegraph  has  no  concern,  and  it  is  diffi 
cult  to  see  how  the  Government  could  interfere  with  the  exist 
ing  order  of  things  in  respect  to  this  matter,  even  if  it  had  as 
full  control  of  the  wires  as  the  Postmaster-General  claims  that 
it  should  exercise.  The  existing  telegraph  companies,  having 
in  view  the  amount  and  regularity  of  the  work  to  be  performed, 
and  also  the  interests  of  the  public,  contract  with  the  several 

*  At  present,  beside  the  "  New  York  Associated  Press,"  there  are  in  existence 
the  "  New  England  Associated  Press;"  the  "  New  York  State;"  the  "  Western ;" 
the  "Northwestern;"  the  "Kansas  &  Missouri;"  the  "Southern,"  and  the 
"  California," 


57 

organizations  of  the  "  Associated  Press "  to  forward  their 
despatches  at  what  may  be  termed  exceedingly  low  "  whole 
sale  prices ;"  but  if  any  other  association  or  company,  being 
free  to  organize,  should  apply  for  like  privileges,  there  can  be 
no  question  but  that  they  would  be  granted.  The  grievance 
complained  of,  therefore,  if  it  really  exists,  rests  upon  the 
"Associated  Press,"  which,  naturally  enough,  are  unwilling 
to  share  advantages,  derived  from  long  establishment  in  busi 
ness,  with  every  new  comer  and  rival,  and  not  with  the  tele 
graph  which  conveys  their  messages,  any  more  than  with  the 
railroad,  the  steamboat  or  the  stage  coach,  which,  in  certain 
cases,  takes  the  place  of  the  telegraph  in  performing  similar 
service. 

As  illustrating,  furthermore,  what  the  telegraph  is,  respec 
tively,  under  a  free  and  a  Government  system,  attention  is  asked 
to  the  fact  that  if,  at  the  present  time,  we  were  to  compute  all 
the  news  matter  delivered  by  the  telegraph  to  the  "  press,"  as 
separately  transmitted  to  each  paper,  it  would  comprise  an 
aggregate  equal  to  all  the  despatches  of  every  kind  sent  over  all  the 
telegraphs  of  the  world,  within  a  given  period  selected  for  com 
parison.  When  a  calculation  in  respect  to  this  matter  was  made 
some  years  ago,  it  was  shown  that  for  the  year  1866  the  whole 
number  of  messages  transmitted  in  Continental  Europe  was 
12,902,538,  for  which  the  gross  receipts  were  $11,597,632.71; 
but  that,  during  the  same  year,  the  total  number  of  messages 
furnished  to  the  newspapers  of  the  United  States  (dividing  the 
total  of  words  by  twenty,  and  computing  separately  for  each 
paper),  was  14,725,181,  and  the  gross  receipts  for  the  same 
$521,509.  And  since  this  time  the  amount  of  "press"  matter 
transmitted  by  the  American  telegraphs  has  greatly  increased ; 
the  "  Western  Associated  Press"  alone  taking  an  average  of  10,000 
words  for  each  of  the  365  nights  of  the  year.  As  another  illus 
tration  of  the  peculiarly  American  character  of  the  "  Associated 
Press,"  and  of  the  remarkable  results  that  have  flowed  from  the 
facilities  afforded  to  it  by  the  telegraph  under  private  manage 
ment,  reference  may  be  made  to  the  statement  made  before  a 
committee  of  Congress,  in  April,  1870,  by  the  President  of  the 
Western  Union,  "  that  he  would  undertake  to  produce  an 
American  journal,  printed  a  thousand  miles  from  the  Atlantic 


68 

coast,  that  should  contain  more  news  from  all  parts  of  the 
world  in  a  single  issue  than  could  be  gleaned  from  the  London 
Times  in  a  week."  In  a  report  from  the  H.  E.  Committee  on 
Appropriations  to  accompany  Mr.  Palmer's  bill  in  favor  of  the 
"  Hubbard  telegraph,"  December,  1872,  the  increase  of  "  press  " 
messages  in  Great  Britain  since  the  absorption  of  the  telegraph 
by  the  Government  is  brought  forward  as  an  argument  in  favor 
of  a  change  in  the  telegraphic  service  of  the  United  States  ;  and 
yet  in  the  same  connection  it  is  stated  that  the  whole  number  of 
"  news  "  words  sent  by  the  Government  telegraph,  a  year  after 
its  establishment  (or  in  1S70-'71),  for  the  whole  United  King 
dom,  was  not  quite  20,000  daily  during  the  session  of  Par 
liament,  and  nearly  15,000  daily  during  the  remainder  of  the 
year — a  result,  in  comparison  with  what  the  "  press  "  of  the 
United  States  have  for  years  required  of  the  telegraph,  almost 
too  insignificant  to  be  used  as  an  illustration. 

If  the  "Associated  Press,"  therefore,  is  a  monopoly,  it  is  a 
monopoly  in  which  nearly  every  reader  of  newspapers  is  an  in 
direct  participant  and  shareholder;  and  for  whatever  of  benefit 
has  resulted  from  the  system,  which  finds  no  parallel  in  Europe, 
the  people  of  the  United  States  "  are  indebted  to  the  Govern 
ment  for  the  one  negative  quality  of  letting  the  '  press '  and  the 
telegraph  alone." 

THE  HUBBARD  PROPOSITION. 

The  case  of  the  Government  having  been  thus  considered,  it 
remains  but  to  examine  the  proposition  of  the  so-called  "  Postal 
Telegraph,"  advocated  by  Mr.  Hubbard.  But  in  doing  this  a 
singular  difficulty  is  experienced  of  finding  out  exactly  what  the 
"  Hubbard  proposition  "  really  is  ;  for  its  authors,  although  pro 
fessing  as  far  back  as  1869  to  understand  most  clearly  the 
nature  of  their  recommendations  to  Congress,  have  caused 
at  least  five  separate  and  different  bills,  or  bills  in  the  nature  of 
amendments,  to  be  reported — two  in  the  course  of  a  single 
month  (December,  1872),  and  four  in  the  course  of  a  single 
year.  In  general,  however,  it  may  be  said  of  them  that,  in 
common  'with  the  proposition  of  the  Postmaster-General, 
the  interference  of  the  Government  in  a  sphere  of  business 
that  does  not  pertain  in  any  degree  to  the  functions  or 
well-ordering  of  a  Eepublican  State,  is  the  thing  primarily 


59 

sought  for.  But  apart  from  this  circumstance,  which  alone 
ought  to  furnish  a  sufficient  reason  for  uncompromising  opposi 
tion  on  the  part  of  all  those  who  believe  in  holding  the  Federal 
Government  strictly  to  its  original  basis,  the  simple,  impartial 
statement  of  the  proposal  of  Mr.  Hubbard  would  seem  of  itself 
to  constitute  the  most  unanswerable  argument  against  its 
endorsement  and  acceptance  that  could  possibly  be  presented. 

Mr.  Hubbard  says,  in  the  outset,  to  the  Government,  if  you 
will  assume  all  the  expenses  of  the  service,  other  than  what 
depend  on  the  mere  operating  and  maintaining  of  the  wires — 
namely,  offices  and  their  equipments  suitable  and  sufficient  for 
operators,  instruments  and  batteries  at  all  the  stations ;  all  clerk, 
bookkeeper  and  messenger  service ;  all  fuel,  lights,  stamps, 
paper  *  and  envelopes ;  allow  us  to  use  the  various  Post-office 
facilities  we  may  require;  relieve  us  from  all  State  and  local 
taxes ;  guarantee  ten  per  cent,  per  annum  on  all  the  stock  of  the 
company,  provided  the  receipts  be  sufficient,  and  give  in  addi 
tion  a  bonus  of  one  million  ten  per  cent,  stock  for  what  are 
pleasantly  termed  the  expenses  of  "  organizing  and  connecting 
wires,"  then  the  new  company  will,  in  turn,  contract  with  the 
Government  to  transmit  messages  for  the  public  at  rates  some 
what  cheaper — "  priority  dispatches"  excepted — than  are  charged 
at  present.  That  relieved  from  such  burdens,  and  endowed 
with  such  privileges,  Mr.  Hubbard  and  his  associates  could 
afford  to  make  good  his  averment  in  respect  to  charges  seems 
not  improbable ;  but  that  the  Western  Union  and  other  exist 
ing  telegraph  companies,  if  endowed  with  equal  privileges, 
would  bo  willing  to  guarantee  equal  or  greater  reductions  in 
rates  may  also  be  taken  for  granted.  Mr.  Hubbard,  there 
fore,  would  seem  to  be  debarred  in  the  outset  from  claiming 
that  his  proposed  organization  can  offer  to  the  Government  any 
more  favorable  basis  for  negotiating  for  the  establishment  of 
cheaper  rates  than  would  be  offered  by  the  organizations  already 
performing  service.  He,  therefore,  in  reality,  asks  the  Govern 
ment  to  take  a  position  which  no  free  government  ought  ever 
to  allow  itself  to  be  placed  in — namely,  that  of  deciding  between 

*  At  the  present  time  the  Western  Union  Company  alone  requires  500  reams 
of  paper  per  month  of  a  single  description,  to  meet  the  consumption  of  tho 
forms  upon  which  the  messages  transmitted  over  its  wires  are  written. 


60 

two  private  parties,  representing  equally  private  interests,  which 
one  it  will  favor  and  which  it  will  crush.  Nay,  more,  he  calls 
upon  the  Government  to  go  further,  and  place  itself  in  opposi 
tion  to  those  companies  and  organizations  who,  when  the  tele 
graph  business  was  an  experiment,  undertook  the  risk,  and 
extend  its  favor  and  bounty  to  other  parties,  who,  no\v  that 
success  has  been  won,  are  willing  to  enter  into  the  possession 
and  enjoyment  of  other  men's  labor.  If  this  be  justice,  it  is  of  a 
quality  more  honored  in  the  breach  than  in  the  observance. 

It  is  intimated  that  the  facilities  asked  of  the  Government, 
under  Mr.  Hubbard's  proposition,  are  of  a  kind  which  will  not 
entail  much  additional  expenditure,  and  that  the  offices  and 
clerks  already  required  by  the  Post-office  may,  to  a  great  extent, 
be  made  available  for  telegraphic  purposes;  but  this  plea  is 
almost  too  specious  to  require  serious  consideration.  The 
Government  of  the  United  States  performs  no  service  except  at 
a  much  greater  expense  than  would  be  incurred  under  similar 
circumstances  by  individuals,  and  all  the  instincts,  precedents 
and  predispositions  of  those  who  serve  it  are  in  a  direction  con 
trary  to  the  practice  of  economy  !  If  there  is,  therefore,  as 
is  constantly  maintained,  any  real  and  true  intent  to  put  an  end 
to  the  constantly  increasing  burden  of  national  expenditures, 
there  must  be  an  inflexible  determination  on  the  part  of  those 
who  control  the  Government  to  avoid  every  new  occasion  or 
pretext  for  expenditure. 

Again,  the  bill  of  Mr.  Hubbard  contains  a  provision  which, 
as  has  been  already  shown  in  discussing  the  Government  propo 
sition,  frees  the  company  chartered  by  it  from  just  that 
responsibility  to  the  public  which  it  is  indispensable  should 
exist  to  ensure  against  indifference,  breach  of  trust  and  neglect; 
inasmuch  as,  in  making  the  company  an  agent  of  the  United 
States,  it  gives  them  the  same  immunity  from  the  payment  of 
damages  which  is  now  possessed  by  the  Post-office  in  the  case  of 
the  non-delivery  of  letters  intrusted  to  the  mails.  It  also  frees 
the  company  from  all  risk  of  defalcation  and  embezzlement, 
and  transfers  the  same  to  the  Government  through  a  provision 
that  the  Post-office  Department  is  to  be  the  agent  to  whom,  in 
the  first  instance,  all  payments  for  the  transmission  of  messages 
are  to  be  made  by  means  of  stamps. 


61 

It  is  also  interesting  to  note  that  this  proposed  charter  of  the 
so-called  Postal  Telegraph  Company,  while  professing  to  be  in 
the  interests  of  the  great  general  public,  and  in  opposition 
to  everything  like  monopoly,  in  reality,  but  as  it  were  covertly, 
provides  for  the  creation  of  a  monopoly  of  the  most  offensive 
and  objectionable  character ;  inasmuch  as  it  authorizes  the 
putting  aside  of  the  ordinary  messages  of  the  public — whatever 
may  be  the  pressure  of  their  necessity — and  the  giving  of 
priority  of  transmission  to  such  other  messages  as  may  be 
registered  and  pay  double.  It  seems  clear  that  the  effect  of  this 
would  be  to  place  the  wires  at  all  times  at  the  exclusive  disposi 
tion  of  those  to  whom  immediate  dispatch  was  an  item  of 
greater  consideration  than  expense  ;  and  if,  as  not  unlikely,  this 
should  prove  to  be  the  case  in  respect  to  the  majority  of  busi 
ness  and  social  messages,  then  the  general  result  of  this  provision 
would  be  to  raise  the  general  average  cost  of  telegraphic  com 
munication,  and  so  completely  neutralize  and  defeat  the  alleged 
object  of  the  Hubbard  proposition.  It  has,  therefore,  been  not 
unaptly  suggested  that  the  title  of  the  "  Postal  Telegraph  "  bill 
should  be  so  amended  as  to  read,  "an  act  for  the  increasing  of  the 
rates  of  correspondence  ty  the  telegraph'" 

But  a  more  objectionable  feature  of  the  proposed  "  Postal  Tele 
graph"  bill,  and  one  which,  whether  its  authors  so  intend  it  or  not, 
gives  to  the  whole  scheme  the  aspect  of  a  device  for  the  direct 
pecuniary  enrichment  of  those  concerned,  is  the  provision  for 
the  issue  of  stock,  to  the  extent  of  one  million  of  dollars,  to  de 
fray  the  expenses  of  organization  and  the  connection  of  the  lines 
of  the  new  company  with  the  various  postal  stations.  Now,  as 
there  are  no  provisions  in  the  bill  which  require  the  contribution 
of  any  money  as  the  basis  of  the  issue  of  this  stock,  or  which  re 
gulate  its  apportionment;  and  as  the  legitimate  expenses  for  or 
ganization  must  be  but  trifling  ;  and  as  the  creation  of  additional 
stock  is  expressly  authorized  to  defray  the  expenses  of  all  lines 
and  wires  purchased  or  constructed,  the  inference  is  unavoid 
able  that  the  million  of  dollars  in  question  is  to  be  divided 
among  the  incorporators  or  other  persons  whose  services  in 
behalf  of  the  charter  may  be  considered  as  desirable.  And  as 
this  special  stock  is  to  be  entitled  to  receive  dividends  out  of  the 
receipts  by  the  Government  for  the  transmission  of  messages,  at 


62 

the  rate  often  per  cent,  per  annum,  it  follows  that  its  authoriza 
tion  by  Congress  would  be  equivalent  to  imposing  a  tax,  in  perpe 
tuity,  of  $100,000  per  annum  on  the  American  people  using  the 
telegraph,  and  all  for  the  exclusive  purpose  of  giving  a  bonus  to 
the  incorporators  named  in  the  bill,  as  an  inducement  for  them 
to  engage  in  a  business  in  which  they  have  now  no  investment, 
and  in  the  conduct  of  which  no  experience. 

PREPAYMENT  BY  STAMPS. 

It  is  to  be  observed  that  the  bill  of  Mr.  Hubbard,  and  also 
that  advocated  by  the  G-overnment,  provide,  as  a  new  and  essen 
tial  feature,  for  the  prepayment  of  all  telegraphic  messages  ;  and 
that,  too,  as  in  the  case  of  letters,  through  the  agency  of  stamps. 
At  first  thought  these  provisions  strike  one  as  likely  to  prove 
most  effective  and  desirable ;  but  a  little  consideration  will  reveal 
the  fallacy  contained  in  them.  Thus,  a  very  large  proportion  of 
the  messages  transmitted  by  telegraph  are  in  the  nature  of  ques 
tions,  in  respect  to  which  the  interest  vests  exclusively  with  the 
inquirer.  A,  for  example,  living  in  New  York,  asks  B,  in  Chi 
cago,  if  he  knows  whether  0  is  in  his  city  ;  if  D  is  good  for  a 
loan,  or  if  E  will  grant  an  interview,  or  speak  at  a  political  meet 
ing.  If  B  should  be  required  to  pay  for  his  answer,  in  which  he 
has  little  or  no  interest  beyond  that  growing  out  of  social  rela 
tions,  it  is  very  probable  that  the  question  would  not  be  put  in 
the  first  instance,  and  almost  certain  that  the  answer  would  not 
be  returned  in  the  second.  If  A  agrees  to  pay  for  B*s  answer  when 
received  at  the  office  in  Chicago,  the  New  York  office  must  either 
give  him  credit  in  Chicago  or  require  a  deposit  in  advance  for  the 
unknown  cost  of  B's  message  when  received,  and  afterwards,  by 
some  complicated  system  of  accounts,  establish  a  clearing  between 
the  office  in  New  York  and  the  office  in  Chicago.  The  result 
would  probably  be  that  a  not  inconsiderable  part  of  the  business 
now  intrusted  to  the  wires  would  be  done  away  with,  or  would 
be  found  to  involve  an  element  of  cost  and  trouble  which  has 
not  been  taken  into  consideration.  And  so  again  in  respect  to 
the  use  of  stamps.  In  a  country  of  limited  extent,  as  England 
or  Belgium,  where  there  is  one  rate  per  word  for  all  distances, 
stamps  may  be  made  available ;  but  in  the  United  States,  where, 
in  addition  to  the  endless  variation  in  the  number  of  words, 


63 

messages  of  the  same  number  of  words  are  to  pay  differently  for 
different  circuits,  and  differently  by  day  and  by  night,  the  num 
ber  of  stamps  that  would  be  required  and  the  calculation  and 
adjustment  made  necessary,  would  be  a  matter  of  no  little  ex 
pense  to  the  Government  and  perplexity  to  the  citizen.  And 
as  some  indication  of  what  this  item  of  stamp  expenditure  is 
likely  to  amount  to,  it  may  be  stated,  in  the  far  more  limited 
sphere  of  the  Internal  Revenue,  the  whole  number  ordered  for 
that,  office  for  the  year  1868  was  367,536,332. 

RELATION  OF  THE  VOLUME   OP  TELEGRAPHIC  BUSINESS  TO  THE 
AGGREGATE   OF  TELEGRAPHIC   EXPENDITURES. 

There  is  another  fallacy  involved  in  the  idea  of  reduced  tele 
graphic  tariffs,  which  the  advocates  of  the  "Government"  and 
"  Hubbard  "  propositions  have  alike  endeavored  to  make  popu 
lar,  and  that  is,  that  the  business  of  the  telegraph  follows  in  gen 
eral  the  same  law  as  the  business  of  the  Post-office ;  and  that 
a  reduction  of  the  tariff  on  telegraph  messages  to  one  half,  one 
third,  or,  as  Mr.  Gratz  Brown  claimed  in  1865,  to  one  twentieth 
of  the  present  average  rates,  would  be  attended  with  such  an 
increase  of  business  as  to  afford  the  maximum  of  profits  in  pro 
portion  to  the  investment.  If  this  be  true,  it  further  follows  that 
the  Government  or  Mr.  Hubbard,  in  proposing  much  lower  rates 
than  are  now  charged,  are  not  only  perfectly  sure  of  the  basis 
on  which  they  propose  to  operate  it,  but  also  that  the  manage 
ment  of  the  existing  companies  is  so  short  sighted  and  penurious 
that  it  prefers  to  adopt  the  one  policy  which  brings  with  it  the 
smallest  ratio  of  profit  with  the  minimum  of  satisfaction  to  the 
public.  Now,  that  a  reduction  of  rates  in  telegraphing  tends  to 
stimulate  business,  and  that,  under  very  low  tariffs,  the  increase 
in  the  number  of  messages  offered  for  transmission  is  something 
enormous,  cannot  be  disputed;  but  a  careful  examination  of  the 
telegraphic  statistics  of  different  countries,  which  within  a  recent 
period  only  have  been  collected  and  tabulated,  brings  to  light 
this  fact,  also,  that  in  any  large  system  of  lines,  after  a  certain 
volume  of  business  has  been  attained,  an  increase  in  the  number 
of  messages  is  always  followed  by  an  increase  of  expenditure.0) 
which,  though  not  fully  proportioned  to  the  increase  of  business, 
still  approximates  it  closely.  That  this,  furthermore,  must  be 


64 

so,  will  appear  evident,  when  it  is  remembered  that  the  business 
of  telegraphing  is  closely  akin  to  the  business  of  writing  letters, 
and  that  "  if  written  letters  were  paid  for  by  the  word,  increase  of 
correspondence  would  not  materially  reduce  their  cost."  Thus,  for 
example,  in  operating  the  telegraph,  each  message  must  be  first 
booked  and  accounted  for;  then,  in  transmitting,  it  must  be 
spelt  out  letter  by  letter,  and  so,  to  all  intents  and  purposes,  be 
rewritten,  and  then  rewritten  a  third  time  by  the  operator  who 
receives  it.  During  the  time  of  its  transmission  it  monopolizes 
the  use  of  one  wire  and  the  labor  of  the  operators  who  work  it, 
and  afterwards  of  the  clerk  who  records  the  despatch  and  the 
messenger  who  delivers  it.  On  the  other  hand,  in  ordinary 
business,  it  need  require  no  more  time  to  sell  a  large  bill  of  goods 
than  a  small  one,  or  to  record  the  sale  and  collect  the  pay 
ment  in  the  one  case  than  in  the  other;  and,  in  like  manner,  a 
locomotive  or  a  ship  which  can  transport  one  hundred  passen 
gers,  or  one  ton  of  mail  bags,  can  generally,  without  any  material 
increase  of  expense,  perform  double  the  work  if  found  necessary. 
If  there  were,  therefore,  no  statistical  information  whatever 
available  concerning  the  peculiar  work  of  the  telegraph,  it  would 
be  only  a  common  sense  inference  that  the  benefit  resulting 
from  a  great  quantity  of  operations  must  be  less  in  telegraphy 
than  in  almost  any  other  industry. 

But  exact  statistics  on  this  subject  are,  as  already  stated,  not 
wanting;  and  an  examination  of  those  of  almost  every  country 
in  Europe  shows  that  the  recent  great  increase  in  the  business  of 
the  telegraph  there  experienced,  which  the  advocates  of  the 
"  Government "  and  "  Hubbard  "  propositions  like  to  dwell  upon 
as  the  result  to  be  especially  sought  for  in  the  United  States,  has 
only  been  attained  through  the  adoption  of  rates  so  utterly 
destructive  of  profit  that  only  Governments  which  can  readily 
resort  to  taxation  to  make  up  a  deficit  can  afford,  under  such 
circumstances,  to  own  and  manage  a  telegraph.  Thus,  for 
example,  a  comparison  of  the  telegraphic  statistics  of  North 
Germany,  Bavaria,  Belgium,  Holland  and  Denmark,  for  the  years 
1865  and  1870,  affords  the  following  striking  and  instructive 
results : 

NORTH  GERMANY. — Increase  in  the  number  of  messages,  259 
per  cent. ;  increase  of  receipts,  76  per  cent. ;  increase  of  expendi 
tures,  83  per  cent. 


65 

BAVARIA. — Increase  of  messages,  63  per  cent. ;  increase  of 
receipts,  17  per  cent. ;  increase  of  expenditures,  149  per  cent. 

BELGIUM. — Increase  of  messages,  252  per  cent.;  increase  of 
receipts,  79  per  cent.;  increase  of  expenditures,  61  per  cent. 

HOLLAND. — Increase  of  messages,  142  per  cent. ;  increase  of 
receipts,  17  per  cent. ;  increase  of  expenditures,  62  per  cent. 

DENMARK. — Increase  of  messages,  149  per  cent. ;  increase  of 
receipts,  19  per  cent.  ;  increase  of  expenditures,  38  per  cent. 

In  like  manner  an  examination  of  the  statistics  of  the  business 
of  the  Western  Union  Company  also  shows  that,  although  137,- 
191  miles  of  wire  were  operated  and  12,444,000  messages  sent 
in  1872,  as  compared  with  85,291  miles  and  5,879,000  messages 
in  1867,  the  net  receipts  of  the  Company  from  all  sources  for 
1872  were  only  $165,303  in  excess  of  those  of  1867. 

The  public,  therefore,  can  readily  understand  how  it  is  that  a 
majority  of  all  the  telegraph  systems  of  the  States  of  Europe, 
notwithstanding  great  economy  and  efficiency  in  management, 
continue  to  show  an  annual  deficit.  Neither  ought  it  to  be  a 
matter  of  surprise  that  the  most  eminent  of  telegraph  authorities 
in  Europe  have,  as  the  result  of  their  most  recent  investigations, 
entirely  reversed  the  opinions  which  they  originally  regarded  as 
unassailable.  Thus,  in  his  recent  work,  tl  Statistics  of  the  Tele 
graph,"  first  presented  to  the  Statistical  Society  of  London  in 
June,  1872,  Sir  James  Anderson  says  :  "Like  every  one  else,  I 
entertained  the  belief  at  one  time  that  a  reduced  tariff  was  the  key  to 
success  in  private  telegraph  enterprise"  and  uthat  this  success  was 
not  realized  in  practice  was  disappointing  in  the  extreme"  Refer 
ring,  also,  to  what  are  called  in  Europe  "  international  telegrams," 
which  correspond  with  the  telegrams  transmitted  in  this  country 
between  the  States,  he  says  :  "  However  much  every  one  engaged 
in  the  control  of  telegraphic  enterprise  may  desire  to  reduce  the  tariff 
and  increase  the  correspondence,  they  should  not  forget  that  this 
increase,  although  certain,  will  decrease  the  revenue,"  and  again, 
"  that  a  reduction  of  tariff  leads  to  a  diminution  of  the  net  product, 
even  under  the  most  favorable  conditions" 

And  again,  M.  Jamar,  Minister  of  Public  Works  in  Belgium, 
in  a  recent  report,  reviewing  the  experience  of  the  telegraph  in 
that  country  under  twenty  years  of  Government  control,*  an 
nounces  the  conclusions  arrived  at  as  follows : 

*  Annals  of  the  Public  Works  of  Belgium,  vol.  xxviii. 

5 


66 

"  That  in  Belgium,  notwithstanding  the  existence  of  the  most 
favorable  circumstances,  all  reduction  of  tariff  has  resulted  in  a 
diminution  of  net  product.'1'1  Sir  James  Anderson  and  M.  Jamar 
also  agree  that  the  results  of  the  telegraphic  experience  of 
Europe  establishes  this  farther  fact,  that  telegrams  relating  to 
commercial  and  business  matters  (which  constitute  the  bulk  of 
the  telegraphic  correspondence  of  the  United  States)  follow  in 
their  movement  "  the  variations  of  political  or  financial  condi 
tions,"  and  are  "  only  influenced  in  a  secondary  degree  by  the 
alterations  of  the  tariff." 

Now,  if  these  conclusions  be  correct,  and  Sir  James  Ander 
son,  of  England,  and  M.  Jamar,  of  Belgium,  unite  in  saying  that 
no  data  can  be  found  to  refute  them,  it  therefore  follows  that 
the  establishment,  through  the  direct  or  indirect  agency  of  the 
Federal  Government,  of  a  greatly  reduced  system  of  telegraphic 
tariffs,  is  something  which  is  sure  to  have  an  adjunct  in  some 
form  of  additional  Federal  taxation — a  taxation,  moreover, 
which  is  not  to  be  limited  to  and  paid  by  the  comparatively 
small  number  of  people  who  use  the  telegraph,  but  is  to  be  dis 
tributed  over  a  population  of  which  not  one  thirtieth  part  have 
any  direct  interest  in  the  subject. 

Finally,  while  there  are  very  many  precedents  for  a  govern 
ment  extending  its  sphere  of  business  and  influence  so  far  as 
to  include  the  ownership  of  railroads,  telegraphs  and  express 
agencies;  and  many  also  for  the  ordaining  of  how  men  shall 
live,  what  they  shall  wear,  what  church  attend,  and  where  they 
shall  trade,  there  are  few  or  none  to  be  found  where  a  gov 
ernment  has  entered  into  a  partnership  with  private  individuals 
for  the  carrying  on  of  business,  in  which  all  the  loss  and  respon 
sibility  is  to  accrue  to  the  party  of  the  first  part,  and  all  the 
pecuniary  profit  to  the  party  of  the  second  part;  and  in  which  a 
divided  responsibility  in  the  management  is  almost  certain  to 
result  in  unsatisfactory  conclusions. 

If  we  accept,  also,  the  statement  of  its  special  advocates, 
the  "  Hubbard  proposition"  is,  after  all,  but  the  "  Govern 
ment  proposition"  in  disguise  ;  for  the  report  made  by  the  Select 
Committee  of  the  House  in  1870,  in  favor  of  the  "  Postal  Tele 
graph,"  after  demonstrating  by  a  great  array  of  fact  and 
argument  the  impolicy  and  anti-Republican  character  of  the 


67 

"  Government  scheme"  for  absorbing  and  working  the  telegraph, 
goes  on  to  speak  of  the  Hubbard  proposition  as  follows  :  "  The 
system  is  a  step  toward  the  governmental ;  it  will  introduce  the 
telegraph  into  the  post-offices,  and  if,  after  trial,  the  public  good 
requires  it,  the  lines  can  be  purchased  by  the  Government  at  an 
appraised  value." 

Furthermore,  as  it  is  represented  alike  by  the  advocates  of  the 
Government  plan  for  absorbing  the  telegraph,  and  by  the  friends 
of  the  partnership  or  postal  telegraph,  that  the  Federal  Govern 
ment  cannot  have  the  facilities  which  it  needs  under  the  existing 
system,  and  that  its  demands  for  service  have  been  treated  most 
arrogantly,  attention  is  asked  to  the  following  extract. of  a  letter 
addressed  by  the  President  of  the  Western  Union  Telegraph  Com 
pany  to  the  Chairman  of  the  House  Committee  on  Appropria 
tions — the  particular  subject  matter  being  a  difference  of  opinion 
between  the  Signal  Service  Bureau  and  the  Western  Union 
Company,  in  reference  to  the  compensation  to  be  awarded  to  the 
former  for  the  performance  of  services : 

11  NEW  YOEK,  April  12th,  1872. 

"  I  beg  to  offer  the  following  suggestion  :  That  authority  be 
given  to  the  President  of  the  United  States,  in  the  event  of  the 
failure  of  the  Signal  Office  to  secure,  by  negotiation,  terms 
and  conditions  deemed  reasonable  for  the  transmission  of  the 
weather  reports  and  the  other  services  connected  therewith,  to 
appoint  an  arbitrator  on  behalf  of  the  United  States,  to  meet 
one  appointed  by  the  telegraph  company ;  the  two  thus 
appointed  to  have  authority  to  choose  an  umpire,  in  case  of  dis 
agreement.  The  decision  of  the  arbitrators  to  be  binding  for 
the  fiscal  year  1872-73,  and  for  that  portion  of  the  current  year 
beyond  the  expiration  of  the  present  arrangement. 

"  I  would  be  pleased  to  have  this  letter  made  a  part  of  the 

record. 

"  I  am,  very  respectfully,  etc., 

"WILLIAM  ORTON,  President. 
"  Hon.  JAMES  A.  GARFIELD, 

"  Chairman,  etc.,  Washington,  D.  C." 

NOTE. — Since  the  above  was  written,  the  advocates  of  the 
"  Hubbard  Proposition,"  apparently  foreseeing  that  the  public 


68 

would  not  be  likely  to  look  with  favor  on  the  creation  and  dis 
tribution  of  the  one  million  ten  per  cent,  stock  for  the  purpose 
of  "  organizing  "  and  "  connecting  wires;"  nor  upon  the  system 
of  "double  paid  priority  messages,"  have  caused  (Dec.  19th, 
1872)  two  new  bills  to  be  reported — one  in  the  Senate  and  one 
in  the  House — in  both  of  which  the  above  provisions  are  omit 
ted  and  the  following  new  ones  substituted  : 

First. — The  capital  of  the  "  Postal  Telegraph  "  Company  is 
fixed  at  $20,000,000,  to  be  paid  up  in  cash  as  required  ;  but  as 
a  report  from  the  Committee  on  Appropriations  (H.  E.)  accom 
panying  this  bill  states  that  the  expenditures  required  to  carry 
out  the  scheme  of  a  "Government  Telegraph,"  occupying  sub 
stantially  the  same  field  as  the  "  Postal  Telegraph,"  would  in 
volve  the  necessity  for  appropriations  or  a  bonded  indebtedness 
estimated  at  least  at  "  $75,000,000,"  it  is  difficult  to  resist  the 
inference  that  the  advocates  of  the  "Postal  Telegraph"  have  some 
other  object  primarily  in  view  than  the  accommodation  of  the 
public. 

Second. — The  charge  for  the  transmission  of  telegrams  is  to 
be  one  cent  a  word  for  each  circuit  through  which  it  shall  be 
transmitted ;  two  hundred  and  fifty  miles  to  constitute  a  circuit 
for  all  distances  not  exceeding  five  hundred  miles;  and  five 
hundred  miles  for  all  greater  distances.  From  the  receipts  from 
the  sale  of  telegraph  stamps  the  Postmaster-General  is  required 
to  deduct  five  cents  for  each  telegram  transmitted — irrespective 
of  the  amount  paid  for  it— to  defray  the  Government  expendi 
tures  for  doing  everything  except  operating  and  maintaining 
the  lines,  and  then  pay  over  the  remainder  to  the  postal  com 
pany  as  full  compensation  for  their  share  of  the  work.  Again, 
in  all  previous  bills  establishing  the  "  Postal  Telegraph,"  it  is 
assumed  that  the  stock  of  the  company  is  to  receive  an  annual 
interest  of  ten  per  cent.,  and  it  is  fair  to  suppose,  although  no 
rate  of  interest  is  mentioned  in  the  new  bills,  that  the  expectant 
investors  of  capital  under  them  still  hold  to  such  anticipation. 
But  if  this  be  so,  it  is  difficult,  looking  at  the  scheme  from  a 
merely  financial  standpoint,  to  see.  why  the  Federal  Government, 
which  can  obtain  money  in  abundance  at  6  per  cent,  and  ex 
pects  to  borrow  at  no  distant  day  at  4  or  4£  per  cent,  should, 


69 

with  the  ostensible  object  of  giving  the  public  cheap  telegraphic 
facilities,  contract  with  a  private  company  for  the  investment  of 
capital,  on  conditions  which  are  manifestly  expected  to  afford, 
out  of  the  tariff  imposed  on  messages,  and  through  the  aid  of 
Government  facilities,  a  rate  of  interest  of  from  four  to  six  per 
cent,  greater. 

Third. — A  telegraphic  stamp  of  five  cents  is  required  to  be  af 
fixed  to  every  telegram  not  transmitted  by  the  lines  of  the 
Postal  Telegraph.  Company — Government  messages,  and  mes 
sages  transmitted  on  lines  maintained  solely  for  private  use,  ex- 
cepted  ;  and  that  herein  is  to  be  found  the  "  meat  and  marrow  " 
of  the  new  proposition  will  appear  evident  from  the  following 
considerations :  Thus,  in  the  bill  representing  the  scheme  of 
the  Government,  it  is  expressly  provided  (and  in  accordance 
with  the  Constitution)  that  all  private  or  corporate  telegraphic 
property  taken  by  the  Federal  authorities  shall  be  paid  for  on  ap 
praisement  ;  and  in  all  the  former  bills  establishing  the  "  Postal 
Telegraph  "  it  has  been  apparently  assumed  that  all  other  com 
panies  might  continue  to  operate  their  lines,  provided  they  were 
able  to  do  so,  in  competition  with  such  rates  as  the  Postal  Tele 
graph  Company,  with  a  large  share  of  its  expenses  assumed  by 
the  Government,  might  see  fit  to  establish.  But  in  the  new- 
bills  the  arbitrary  tax  of  five  cents  imposed  on  each  message 
transmitted  by  all  other  companies,  and  from  which  the  mes 
sages  of  the  Postal  Company  are  to  be  exempt,  creates  an  instru 
mentality  which  will  effectually  enable  the  Postal  Company  to 
crush  out  all  other  companies  without  making  compensation, 
and  virtually  enables  them  to  say  to  its  rivals,  "  Unite  with  us, 
and  put  in  your  property  on  our  terms,  or  wind  up  your  affairs 
as  speedily  as  possible,  and  leave  it  to  us  to  administer  upon 
your  effects."  If,  however,  there  is  yet  anything  of  legal  force 
in  the  old  maxim,  "Quod  facit  per  alium  facit  per  se"  the  Fed 
eral  Government,  in  authorizing  such  indirect  confiscation  of 
private  property,  could  not  escape  being  involved  (in  a  moral 
liability,  at  least)  for  heavy  damages ;  but  the  proposition  for 
destroying  by  Federal  taxation  private  property  under  one 
ownership  for  the  benefit  of  similar  property  under  similar 
ownership  is  not  thereby  rendered  any  less  extraordinary  and 
despotic. 


70 


CONCLUSION. 

In  thus  submitting  the  results  of  my  investigations,  I  would 
take  occasion  to  remark  that  the  whole  case  has  been  so  often 
and  so  fully  argued  and  reviewed  by  committees  of  Congress, 
the  press,  and  the  special  advocates  of  the  several  involved 
interests,  that  little  of  originality  can  attach  to  any  new  presen 
tation.  I  have,  therefore,  aimed  at  nothing  more  than  to  present 
the  main  facts  of  the  case  in  such  a  way  as  will  facilitate  their 
clear  and  easy  comprehension.  And  when  that  comprehension 
is  attained  to  by  the  people,  there  can  be  little  doubt  on  which 
side  the  friends  of  a  truly  free  Government  and  the  opponents 
of  official  centralization  and  interference  will  make  haste  to 
array  themselves. 

I  am,  yours  most  respectfully, 

DAYID  A.  WELLS. 


APPENDIX   A. 


The  following  important  correspondence  between  the  Post-office 
Department  and  the  President  of  the  Western  Union  Telegraph  Com 
pany,  detailing  the  statistics  of  the  business  of  the  latter  for  the  year 
1872,  was  not  included  in  the  report  of  the  Postmaster-General  : 

Executive  Office, 
WESTERN  UNION  TELEGRAPH  COMPANY, 

NEW  YORK,  October  19,  1872. 
HON.  J.  A.  J.  CRESWELL, 

Postmaster-General,  Washington,  D.  C. 

SIR — Referring  to  your  communication  of  date  August  26,  1812, 
I  now  have  to  submit  the  following  information,  in  reply  to  your 
inquiries. 

On  the  first  day  of  July,  1872,  this  Company  controlled  and 
operated  62,032  miles  of  line,  and  137,190  miles  of  wire.  Of  this 
amount  1,212  miles  of  line  and  2,742  miles  of  wire  are  in  New 
Brunswick  and  Nova  Scotia,  and  512  miles  of  line,  bearing  one 
wire,  in  British  Columbia;  leaving  60,308  miles  of  line  and  133,936 
miles  of  wire  in  the  United  States.  The  number  of  offices  operated 
on  that  day  was  5,237. 

During  the  year  ending  June  30,  1872,  there  were  sent  : 
10,271,935  paid  messages. 

660,203  partially  paid  and  free  messages,  and 
1,512,361  press  messages. 

The  number  of  press  messages  is  an  estimate  made  by  dividing 
the  number  of  words  sent  for  the  press  by  thirty,  which  is  taken 
as  about  the  average  number  of  words  in  ordinary  commercial  and 
social  messages. 

The  number  of  messages  stated  does  not  include  messages  sent 
by  and  for  railroad  companies  between  stations  on  the  line  of  the 
roads,  nor  service  messages  of  the  Telegraph  Company.  Of  these 
two  classes  no  record  is  kept.  The  use  of  one  wire  on  many  im 
portant  railroad  routes  is  almost  wholly  devoted  to  the  transmis 
sion  of  railroad  messages. 

The  gross  receipts  of  the  Company  for  the  year  ending  June  30, 
1872,  were  $8,457,095.77,  and  the  gross  expenses,  exclusive  of 
construction,  were  $5,666,863.16. 

I  have  the  honor  to  be,  with  great  respect, 
Your  obedient  servant, 

(Signed,)  WILLIAM  ORTON, 

President. 


72 


Executive  Office, 
WESTERN  UNION  TELEGRAPH  COMPANY, 

NEW  YORK,  October  28,  1872. 
HON.  J.  W.  MARSHALL, 

Acting  Postmaster-General, 

Washington,  D.  G. 

SIR — I  have  had  the  honor  to  receive  your  communication  of 
date  October  25th,  inquiring  as  to  what  portion  of  the  gross 
receipts  of  the  company,  during  the  last  fiscal  year,  was  on  account 
of  press  dispatches,  and  what  proportion  of  the  gross  expenses  are 
charged  to  salaries  and  maintenance,  respectively,  and  whether 
any  part  of  said  sum  is  on  account  of  payments  made  for  leases  of 
lines  of  other  companies. 

In  reply  thereto,  I  have  to  say  that  the  gross  revenue  was 
derived  as  fcllowf: 

For  transmission  of  messages $7,040,803.53 

"  "  press  reports 979,083.71 

"  "  market  reports 107,579.72 

"  "  weather  reports 137,522.88 

From  all  other  sources 192,105.93 

Total  receipts $8,457,095.77 

The  disbursements  were  as  follows: 

Paid  other  lines. $160,514.74 

Refunded  and  uncollectible 59,881.01 

Salaries 3,058,363.22 

Messengers 293,908.30 

Printing  and  Stationery 166,196.24 

Eent,  light  and  fuel 328,999.48 

Office  furniture,  fixtures  and  repairing 116,345.62 

Instruments  and  battery 240,991.02 

Claims  for  damages  and  law  expenses 41,530.68 

Taxes 45,445.21 

Repair  and  maintenance  of  lines 930,005.17 

Kent  of  lines  leased 150,082.42 

Miscellaneous 74,600.05 


$5,666,863.16 

It  is  probable  that  the  receipts  for  press  reports  were  slightly  in 
excess  of  the  amount  stated,  as  the  separation  is  made  during  the 
month  by  reinspection  of  the  messages,  and  some  press  messages 
may  be  overlooked. 


73 

The  receipts  for  market  reports  are  not  paid  by  the  press. 

Those  "  from  other  sources  n  include  premium  on  gold  received 
from  the  tolls  accruing  to  the  company  on  cable  business,  sub 
sidies,  commissions  on  money  transfers,  and  dividends  on  stock  held 
by  the  company. 

The  disbursement  for  messenger  service  is  almost  entirely  for 
salaries,  and  the  amount  paid  for  repair  and  maintenance  of  lines 
includes  the  salaries  of  the  repairers. 

I  am,  very  respectfully,  etc., 
(Signed),  WILLIAM  ORTON, 

President. 


$19,675,48 


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APPENDIX  C. 


EXECUTIVE   OFFICE, 


NEW  YORK,   October  15,  1872. 


BRIG.  GENERAL  ALBERT  J.  MYER, 

Chief  Signal  Officer,  (&c.,  <&c.,  War  Department, 
ton,  D.  0. 


Er, 


SIR — I  have  the  honor  to  acknowledge  the  receipt  of  your  com 
munication  of  September  12,  1872.  Absence  from  the  city,  and 
the  unusual  pressure  of  business  preceding  and  incident  to  the 
annual  meetings  of  the  Stockholders  and  Directors  of  the  Company, 
including  the  preparation  of  my  Annual  Report,  have  prevented  an 
earlier  reply. 

My  letter  of  August  28,  1872,  presented  the  views  of  the  Com 
ny  concerning  the  arrangement  made  with  the  United  States  in 
ay,  1871,  and  which  expired  June  30,  1872;  it  also  sought  to 
establish  the  justice  of  the  claim  of  the  Company  for  compensa 
tion  for  services  rendered  the  Signal  Office  under  that  arrangement 
during  the  last  nine  months  of  the  term. 

A  careful  examination  of  the  reply  has  failed  to  discover  therein 
any  indication  that  the  claim  is  considered  unjust  or  inconsistent 
with  the  original  and  supplementary  agreements  made  with  the 
representatives  of  the  United  States.  It  is  inferred,  therefore, 
that  the  accounts  have  been  approved,  and  that  the  statement, 
"  the  office  is  authorized  to  direct  the  settlement  of  them,"  is 
intended  to  be  understood  that  the  office  has  directed  them  to  be  paid. 
Much  gratification  has  been  derived  from  the  perusal  of  the 
somewhat  elaborate  history  of  the  first  arrangement  made  between 
the  Signal  Office  and  the  Company,  which  you  have  taken  the 
trouble  to  give;  and  although  the  relation  of  events  anterior  to 
May,  1871,  with  the  matters  of  account  and  claims  for  payment  for 
services  rendered  by  the  Company  from  October  1,  1871,  to  July 
1,  1872,  is  scarcely  apparent,  yet  it  is  agreeable  to  the  Managers 
of  the  Company  to  learn  that  the  views  of  the  Signal  Office,  here 
tofore  expressed,  concerning  their  action  in  tendering  the  free 
use  of  the  Company's  lines,  and  all  other  facilities  at  their  disposal 
required  to  inaugurate  the  Weather  Reports,  at  a  time  when  there 
was  no  appropriation  from  which  compensation  could  be  made, 
are  unchanged. 

There  is,  however,  a  liability  to  draw  an  erroneous  inference  from 
the  statement  referring  to  this  arrangement,  which  seems  to  at 
tribute  the  action  of  the  Company  to  its  inability  to  fix  in  ad- 


76 

vance  a  proper  rate  of  compensation  for  this  service.  It  was 
represented  to  the  Company  that,  before  the  Signal  Office  could 
make  use  of  the  Telegraph,  instruments  must  be  procured  and 
other  facilities  provided,  and  expenses  incurred  which  might  ex 
haust  the  appropriation;  it  was,  therefore,  impossible  to  say  what 
sum,  or  if  any  sum  at  all  would  be  available  for  the  payment 
of  telegraphic  service.  It  was  the  suggestion  of  the  President  of 
the  Company  that  a  preliminary  service  of  four  months  be  un 
dertaken — not  merely  for  the  purpose  of  ascertaining  the  cost  of 
such  service,  but  because  :  first,  the  Chief  Signal  Officer  expected 
to  require  all  the  funds  at  his  disposal  for  the  purchase  of  ap 
paratus,  and  for  other  necessary  expenses  preliminary  to  the 
transmission  of  telegraphic  reports  ;  and,  secondly,  the  period  of 
four  months  would  expire  with  the  Congress  which  would  be  in 
session  during  three  months  of  the  term,  and  which  it  was  expected 
would  be  influenced  by  the  results  of  the  experiment  to  appropri 
ate  such  a  sum  as  "  future  negotiation "  should  show  was  neces 
sary.  It  subsequently  appeared  that  the  Chief  Signal  Officer 
was  correct  in  assuming  that  no  part  of  the  appropriation  under 
his  control,  when  the  experimental  term  commenced,  was  available 
for  the  payment  of  telegraphic  charges. 

But  the  expectation  of  the  Company  that,  during  the  period  of 
four  months  for  which  it  had  stipulated  to  make  no  charge,  some 
effort  would  be  made  by  the  Chief  Signal  Officer  to  negotiate  an 
arrangement  for  the  future  was  not  realized.  The  Signal  Office 
made  no  application  to  the  Company  for  "  future  negotiation "  on 
any  basis  during  that  term.  "  The  public  spirit  which  prompted 
the  perfectly  fair  and  liberal  proposition  made  at  that  time  on 
the  part  of  the  Company"  was  disappointed  at  its  reception  by 
the  Signal  Office,  and  the  gratification  which  its  more  generous 
recognition  has  subsequently  afforded  is  not  quite  complete,  be 
cause  of  the  fact  that  it  comes  in  reply  to  the  repeated  applica 
tions  of  the  Company  for  payment  of  claims  for  service  rendered, 
the  justice  of  which  has  not  been  denied,  although  the  claims 
still  remain  unpaid. 

It  seems  necessary  at  this  point  to  state  that,  in  order  to  re 
lieve  the  President  of  the  Company  as  far  as  possible  from  the 
merely  clerical  labor  of  preparing  the  papers  necessary  for  the 
inauguration  of  the  Weather  Reports,  the  Chief  Signal  Officer 
kindly  took  that  labor  upon  himself  As  compensation  for  the 
service  to  be  rendered  during  the  experimental  term  was  not  ex 
pected,  and  the  material  stipulation  was  that  made  by  the  Com 
pany  agreeing  to  make  no  claim  for  service,  except  for  any 
balance  of  the  appropriation  which  might  remain  after  all  other 
charges  had  been  paid,  the  President  did  not  hesitate  to  sign  the 
memorandum  prepared  by  the  Chief  Signal  Officer,  notwithstand 
ing  it  contained  what  were  deemed  immaterial  stipulations,  which 
it  was  well  known  to  all  connected  with  the  Telegraph  could 
not  be  literally  performed.  If  it  was  "  the  essential  part  of  the 
understanding"  of  the  Chief  Signal  Officer,  in  the  preparation  of 
the  memorandum  which  he  submitted  to  the  President  of  the 


77 

Company  for  execution,  after  the  use  of  the  Company's  wires  had 
been  tendered,  that  the  experiment  was  merely  to  procure  data 
"  as  a  basis  for  future  negotiation,"  it  is  to  be  regretted  that 
the  President  of  the  Company  did  not  then — as  he  does  not  now 
— so  understand  it.  The  Company  did  not  intend  to  stipulate  to 
inaugurate  a  new  system  of  accounts;  nor  was  it  expected  that 
the  evidence  which  its  records  afford,  and  the  opinions  of  its  most 
experienced  managers  in  addition  thereto,  would  be  wholly  dis 
regarded  in  any  subsequent  consideration  of  the  value  of  the  ser 
vice  rendered  the  Signal  Office. 

The  experience  of  the  first  two  months  demonstrated  to  the  man 
agers  of  the  Company  that  the  service  they  had  undertaken  for 
the  Signal  Office  was  so  burdensome  and  expensive,  and  so  damag 
ing  in  its  effect  upon  other  business,  that  no  ordinary  rate  of 
compensation  would  enable  them  to  continue  it  without  serious 
loss.  It  occurred  to  them  to  suggest  that  possibly  the  compensa 
tion  might  be  increased  without  cost  to  the  United  States  by  an 
arrangement  which  should  give  the  Company  all  the  telegraphic 
business  of  the  several  departments.  Such  an  arrangement  did 
not  then,  nor  does  it  now,  seem  to  be  an  improper  one  to 
suggest  or  to  make.  The  ordinary  business  of  the  Government, 
at  the  rates  then  paid,  afforded  a  profit  to  the  Company.  The 
Signal  Reports  would  not  afford  a  profit  at  the  same  rates,  be 
cause  of  the  more  difficult  aud  expensive  character  of  the  ser 
vice.  Besides,  there  was  a  manifest  injustice  in  putting  an  oner 
ous  and  profitless  service  upon  this  Company  by  one  department 
of  the  Government  while  another  was  giving  profitable  business 
to  our  competitors.  The  justice  and  propriety  of  this  view  of  the  case 
was  subsequently  recognized  fully,  not  only  by  the  Chief  Signal 
Officer,  in  respect  to  the  business  of  his  office,  but  by  his  pro 
fessional  adviser,  the  Honorable  William.  Whiting.  It  was  under 
stood,  as  a  part  of  the  arrangement  made  in  May,  1871,  in  the 
negotiation  of  which  the  Chief  Signal  Officer  had  the  able  assist 
ance  of  Mr.  Whiting,  that  the  Signal  Reports  were  to  be  given 
exclusively  to  this  Company;  and,  also,  that  the  telegraph  business 
of  all  the  departments  was  to  be  diverted  to  our  lines,  so  far  as  this 
could  be  done,  by  representing  to  the  officials  of  those  departments 
the  character  and  value  of  the  services  which  the  Company  had  then 
undertaken  to  render  for  the  United  States.  This  was  all  that  was 
asked  to  be  or  that  could  be  done  in  that  direction  in  the  absence 
of  special  authority. 

The  assumption  that  the  action,  or  rather  the  non-action,  of  the 
Signal  Office,  upon  the  suggestion  of  the  Company  that  a  portion 
of  the  compensation  for  future  service  should  be  made  by  giving 
to  it  the  ordinary  business  of  the  other  departments,  contributed 
to  "the  difficulties  which  made  necessary  the  conferences  termi 
nating  in  the  Spring  of  1871  "  is  entirely  erroneous.  Those  diffi 
culties  resulted  from  other  causes  altogether,  and  those  over  which 
the  Company  had  no  control.  The  fact  that  no  attempt  was 
made  to  negotiate  with  the  Company,  during  the  experimental  term,. 
for  a,  continuation  of  the  service  beyond  that  term,  occasioned 


78 

surprise;  but  an  explanation  was  soon  found  in  information 
which  reached  the  Company  that  the  influence  of  the  Signal 
Office  was  being  exerted  upon  Congress  to  procure  the  enactment  of 
a  proviso  to  the  bill  making  appropriations  for  the  Weather  Re 
ports,  which  indicated  an  expectation  on  the  part  of  the  Signal 
Office  that  the  Company  could  be  compelled  to  continue  the 
service  without  negotiation,  and  to  accept  such  compensation  as 
the  Signal  Office  should  advise  the  Postmaster-General  was  suffi 
cient.  The  fact  that  this  proviso  became  a  law  seemed  to 
establish  the  correctness  of  the  information  which  had  been 
received  concerning  it. 

It  thus  appears  that  the  first  return  received  for  "the  public 
spirit  which  prompted  the  perfectly  fair  and  liberal  proposition 
made  by  the  Company"  to  enable  the  Weather  Reports  to  be 
inaugurated,  was — not  an  inquiry  to  ascertain  the  views  of  the 
Company  as  to  the  cost  of  the  service,  as  the  basis  of  negotia 
tion  for  its  continuation,  but  the  enactment  of  a  law,  upon  ex 
parte  representations,  without  notice  to  the  Company,  and  with 
out  opportunity  to  be  heard  before  Congress,  which  seemed  to 
be  designed  to  enable  the  Signal  Office  to  compel  the  perform 
ance  of  the  service  in  future  upon  such  terms  as  it  might  see 
fit  to  impose. 

The  repeated  efforts  of  the  Company  to  ascertain  the  views 
of  the  Signal  Office,  as  to  service  beyond  the  experimental  term, 
were  unsuccessful.  The  arrangement  expired  by  limitation  on 
the  first  of  March.  It  was  continued  at  the  request  of  the 
Signal  Office  until  the  end  of  the  session  of  Congress,  March 
3d,  when  it  ceased — simply  because  no  agreement  had  been 
made  with  the  Company  for  continuing  it. 

The  authority  of  the  Postmaster-General  to  fix  the  tele 
graphic  charges  for  Government  messages,  under  the  Act  of 
Congress  approved  July  24,  1866,  was  not  denied.  The  Company 
did  not,  however,  admit  the  right  of  that  officer  to  have  control 
of  our  wires,  to  direct  when  and  how  circuits  should  be  made  up, 
and  by  what  routes  messages  should  be  sent  towards  their  destina 
tion  ;  nor  did  it  admit  the  right  of  any  officer  of  the  Government 
to  say,  in  effect,  that  private  citizens,  holding  no  office  under  the 
Government,  could  be  required  to  open  their  offices  at  unusual  and 
inconvenient  hours  in  the  morning,  and  to  keep  them  open  at 
night  until  the  permis-ion  of  a  Government  official  to  close  them 
had  been  given  ;  yet  the  course  of  the  Signal  Office  towards  the 
Company  seemed  to  imply  that  such  authority  over  its  wires,  and 
offices,  and  employes,  was  conferred  by  the  law  of  Congress, 
which  was  understood  to  have  been  enacted  with  the  knowledge 
and  approval,  if  not  at  the  solicitation  of  the  Chief  Signal  Officer. 

The  Company  had  performed,  during  four  months,  a  new  and 
difficult  service  without  compensation.  It  had  been  ready  during 
that  time,  as  it  has  been  at  all  times  since,  to  negotiate  with  the 
representatives  of  the  United  States  for  any  service  desired  by 
any  Department  of  the  Government,  and  for  this  particular  service 
to  accept  a  less  average  rate  of  compensation  than  is  paid  for 
other  telegraphic  business.  But  justice  to  the  stockholders,  and 


79 

the  self-respect  of  the  managers  of  the  Company,  alike  required 
that  an  apparent  attempt  to  place  the  control  of  the  Company's 
property  and  business  in  the  hands  of  officials  of  the  Govern 
ment  should  be  resisted  promptly  and  firmly.  It  was  under 
such  circumstances,  and  for  such  reasons  alone,  that  the  man 
agers  of  the  Company  were  reluctantly  constrained  to  discon 
tinue  the  transmission  of  the  Weather  Reports. 

Subsequently,  negotiations  were  opened  with  the  Company  by 
the  Chief  Signal  Officer,  assisted  by  the  Honorable  William 
Whiting.  These  negotiations  resulted  in  an  agreement  between 
the  United  States  arid  the  Company  for  the  transmission  of  the 
Weather  Reports  for  one  year  from  May  24,  1871. 

The  Company  was  represented  in  this  negotiation  by  its  Presi 
dent,  and  Mr.  George  B.  Prescott,  its  Electrician.  It  was  their 
understanding  that  the  service  of  the  Company  was  to  be  per 
formed  according  to  a  certain  schedule  of  circuits,  and  in  the 
words  of  a  numerical  cipher,  both  of  which  were  then  submitted 
and  made  the  basis  of  the  agreement. 

The  right  of  the  United  States  to  require  the  performance  by 
the  Company  of  the  peculiar  service  desired  by  the  Signal  Office, 
at  rates  of  compensation  to  be  fixed  by  the  Postmaster-General, 
was  not  admitted.  The  compensation  was  fixed  by  agreement; 
and,  although  it  was  deemed  inadequate  by  the  representatives  of 
the  Company,  it  was  accepted — partly  because  of  their  desire  to 
contribute  to  the  success  of  a  scheme  which  it  was  believed  would 
prove  of  benefit  to  the  public,  and  partly  because  of  represen 
tations  that  the  appropriation  would  not  justify  larger  compen 
sation.  The  compensation  agreed  upon  was  for  the  transmission 
of  the  words  of  a  certain  cipher  over  particular  circuits,  both 
of  which  were  submitted.  It  was  not,  however,  expected  by  the 
representatives  of  the  Company  that  both  the  cipher  and  the 
circuits  were  to  be  adhered  to  inflexibly.  On  the  other  hand, 
it  was  not  expected  that  changes  would  be  made  which  would 
increase  the  cost  of  the  service  to  the  Company. 

In  December,  1871,  the  Company  was  notified  that  an  entirely 
new  cipher  would  be  put  in  operation  on  the  first  day  of  the 
new  year.  A  very  slight  -  examination  of  the  proposed  cipher 
satisfied  the  Managers  of  the  Company  that  its  use  would 
greatly  increase  the  difficulties,  and  consequently  the  cost  of 
the  service,  and  therefore  they  objected  to  its  introduction  as 
a  violation  of  the  agreement.  But,  notwithstanding  the  objections 
of  the  Company,  the  new  cipher  went  into  operation  on  January 
1,  1872.  The  working  of  the  new  cipher  was  carefully  watched, 
and  the  result  justified  fully  the  apprehensions  which  the  Managers 
of  the  Company  had  previously  expressed  concerning  it.  The 
time  of  the  occupation  of  the  Company's  wires  was  materially 
increased,  while,  at  the  same  time,  at  the  rate  agreed  upon  per 
word,  the  compensation  was  materially  diminished. 

An  examination  of  the  reports  transmitted  upon  the  New  York  and 
Lake  City,  the  New  York  and  Milwaukee,  and  New  York  and  Port 
land  circuits,  from  the  sixth  to  the  fourteenth  of  January,  inclusive, 
developed  the  following  facts:  The  averasre  daily  occupation  of 


80 

these  three  circuits  with  Weather  Reports  was  thirteen  hours  and 
fifty-four  "minutes.  Before  the  new  cipher  was  introduced  the 
average  time  was  ten  hours  and  thirty-eight  minutes,  and  the 
average  number  of  words  transmitted  in  that  time  was  7,876, 
or  at  the  rate  of  12.3  words  per  minute.  But  with  the  new 
cipher  there  were  transmitted  in  thirteen  hours  and  fifty-four 
minutes  but  5,370  words,  being  at  the  rate  of  6.4  words  per 
minute.  Thus,  for  the  increased  occupation  of  our  wires,  owing 
to  the  difficulties  of  transmitting  this  ingeniously  constructed 
cipher,  we  would  receive  at  the  contract  rate  per  word  more 
than  thirty  per  cent,  less  compensation. 

Subsequently,  the  position  of  the  Company  in  this  regard  was 
sustained  by  the  opinion  of  the  Honorable  William  Whiting, 
who  recommended  that  the  rate  per  circuit  for  Signal  Service 
messages  be  increased  from  two  to  three  cents  per  word.  In 
his  communication  on  this  subject  he  says : 

"  This  conclusion  is  founded  upon  the  test  of  the  practical 
"  use  of  the  cipher  now  adopted,  which  shows  that  it  is  more  ex- 
"  pensive  than  the  one  originally  adopted — and  as  the  new  cipher  was 
"  introduced  on  the  first  of  January  last,  I  shall  also  recommend 
"  that  the  increased  rate  shall  be  applied  from  and  after  that  date.'; 
Although  this  opinion  bears  date  May  9,  1872,  neither  the 
compensation  at  the  rate  named  therein,  nor  any  compensation 
whatever,  has  been  received  by  the  Company  for  the  period  dur 
ing  which  the  new  cipher  has  been  in  operation,  nor  for  the 
three  months  next  preceding.* 

The   change    from    two   to   three   cents   per   word   is    spoken   of 
as   an   increase    of   fifty    per   cent.,    and    without    explanation    the 
impression  may  be  conveyed  that   such  an  increase  was  asked  and 
allowed.     As  a   matter  of  fact,  however,  there  was  no   increase  of 
compensation   by   the   change   from   two   cents   to   three   cents   per 
word,   for  the    reason  that   it   required  a   longer  time   to  transmit 
the  less  number  of  words  of  the  new  cipher.     The  minimum  num 
ber   of  words    in   the   original   cipher   transmitted   daily  over   any 
of  the   circuits   was   44.      At    two   cents   per   word    the  Company 
would   receive  88   cents.      The   minimum   of  the   new  cipher    was 
31    words.      At   three   cents    per   word   the   daily    product   would 
be  93   cents.     This   shows   an   apparent  increase   of  only    5T6F   per 
cent. ;    yet  the  wires  were  occupied  an  average  of  from  five  to  eight 
per  cent,   longer  each    day  in   transmitting   31  words   of  the   new 
cipher   than  44  of  the   old.     The  use   of  the  new  cipher  increased 
considerably    the   number   of  service   messages  required   to  correct 
errors   resulting   from   its    inartistic   construction,   and    these    were 
sent   without  compensation,  as   stipulated   in  the   agreement.      The 
Managers   of  the  Company   do   not   desire  to   enter   again  upon  a 
discussion  of  the  subject   of  the  rates.     The  illustration  submitted, 
showing  the  time  a  particular  circuit  was  occupied,   and   the  com 
pensation   payable    therefor,   loses  whatever    force   it    may   appear 
to  have    in  the  presence   of  the   following   statement   of  facts  : 
The   signal  service  business  for   the  month   of  January,  1872,  at 

*  See  Note,  page  93. 


81 

the  rate  of  two  cerits  per  word  for  each  circuit,  would  pay  the 
Company  $86,926  in  a  year.  If  the  same  service  were  charged  at 
the  rates  established  by  the  Postmaster-General  for  other  Govern 
ment  messages — that  is  to  say,  one  cent  per  word  for  each  cir 
cuit  of  250  miles,  it  would  amount  to  $195,275;  while,  at  the 
average  rates  charged  the  public,  the  same  service  would  amount 
to  $445,321. 

A  majority  of  the  gross  receipts  of  the  Company  is  from 
general  business  at  average  rates. 

It  has  been  repeatedly  demonstrated  that  it  costs  the  Company 
seventy  per  cent,  of  its  gross  receipts  to  carry  on  the  business.  If 
Signal  Office  business  costs  only  the  average  of  all  other  business 
it  would  yield  the  average  profits.  But  Signal  Office  Reports  have 
paid  less  than  half  the  average  rate,  and  cost  more  than  the 
average  to  transmit ;  precisely  how  much  more  has  not  been 
stated,  for  the  reason  that  it  is  not  possible  to  ascertain.  These 
reports  monopolized  not  merely  wires  and  circuits,  but  at  times 
the  whole  system  of  circuits  over  large  portions  of  territory. 
In  the  question  of  the  cost  there  is  involved  not  only  the  actual 
expense  for  specific  service,  but  the  damage  resulting  from  other 
business  being  delayed.  For  every  operator  employed  in  sending 
and  receiving  Signal  Reports  it  sometimes  happened  that  two 
would  be  idle,  because  their  wires  were  taken  to  make  the  special 
circuits.  When  the  President  of  one  of  the  most  important 
Railroad  Companies  in  the  country  will  state  the  cost  each  of 
carrying  a  limited  number  of  passengers  by  special  train,  three 
times  a  day,  such  trains  to  have  priority  over  all  others,  the 
service  to  begin  at  the  same  hour  each  day  and  to  continue 
daily  for  a  year,  then  the  managers  of  this  Company  will 
undertake  to  show  that  the  cost  of  a  precisely  similar  service  by 
the  Telegraph  is  certainly  greater  than  sending  ordinary  messages 
in  the  usual  way. 

On  page  135  of  the  Annual  Report  of  the  Chief  Signal  Officer 
to  the  Secretary  of  War  for  the  fiscal  year  ended  June  30,  1871, 
is  a  table  which  exhibits  the  rates  then  charged  by  all  the 
Telegraph  Companies  from  Washington  to  65  of  the  most  im 
portant  telegraph  stations  in  the  United  States,  and  also  a 
comparison  between  the  rates  charged  the  public  and  those 
fixed  by  the  Postmaster-General  on  Government  business  for 
single  messages  and  for  messages  of  100  words.  The  comparison 
is  as  follows : 

Average  rate  paid  by  the  public  per  message,  $2.29.  The 
same  message,  at  Government  rate,  $1.25.  For  100  words,  rate 
paid  by  the  public,  $13.98.  By  the  Government,  $4.14. 

Concerning  this  exhibit  the  Chief  Signal  Officer  remarks :  "  Cal 
culations  made  from  the  above  table  show  an  average  saving  to 
the  United  States,  beyond  what  had  been  paid  previously  in  the 
case  of  the  shorter  messages  classified  as  above,  of  45  per  cent., 
and  in  the  longer  messages,  of  70  per  cent.,  which  rate  increases  in 
favor  of  the  United  States  when  the  number  of  words  exceeds  100." 

That   this   conclusion    is    justified  by   the   exhibit    is    not    ques- 


82 

tioned.  But  something  more  appears  to  be  proven  than  is 
contained  in  the  statement  quoted.  If  the  cost  of  ordinary- 
Telegraphic  business  is  70  per  cent,  of  the  gross  receipts  at  the 
average  rates  paid  by  private  citizens,  it  follows  that  a  part  at 
least  of  the  "  saving  to  the  United  States,"  which  resulted  from 
the  reduction  of  45  per  cent,  in  the  rates  for  Government  mes 
sages  made  by  the  Postmaster-General,  was  at  the  expense  of 
the  Telegraph  Companies,  who  performed  the  service  for  the 
United  States  at  rates  below  the  average  cost. 

It  seems  proper  to  remark,  in  this  connection,  that  although 
the  table  referred  to  in  the  report  of  the  Chief  Signal  Officer 
fairly  exhibits  the  advantages  which  the  Government  derives  over 
individuals  in  the  use  of  the  Telegraph,  it  conveys  an  erroneous 
impression  of  the  average  rates  actually  paid.  If  Washington 
sends  the  same  number  of  messages  to  each  of  the  65  stations 
named  in  the  table,  then  the  average  charge  per  message 
would  be  ascertained  by  adding  together  the  65  separate  rates 
and  dividing  the  sum  by  the  number  of  stations.  For  ex 
ample  :  The  charge  from  Washington  to  New  York  is  given  as  49 
cents.  From  Washington  to  San  Diego,  California,  $8.51.  The 
average  of  these  charges  is,  therefore,  $4.50;  but  it  is  probable 
that  of  every  100  messages  from  Washington  there  will  be  ninety- 
nine  destined  to  New  York  to  one  for  San  Diego.  On  this  basis  the 
average,  instead  of  $4.50,  would  be  but  57  cents. 

But  the  substitution  of  the  new  cipher  was  not  the  only  em 
barrassment  from  which  the  Company  suffered  in  connection  with 
Signal  Office  business. 

While  the  negotiations  were  in  progress  between  the  represen 
tatives  of  the  Signal  Office  and  of  the  Company,  in  the  Spring 
of  1871,  it  was  represented  by  the  Chief  Signal  Officer  that,  in 
addition  to  all  the  other  facilities  required,  it  was  necessary  that 
he  should  have  at  his  disposal  special  circuits  between  Washington 
and  New  York,  Washington  and  Chicago,  and  Washington  and 
New  Orleans.  The  wires  for  these  circuits  were  to  be  connected 
with  the  Signal  Office  at  7.45  A.  M.,  4.45  P.  M.,  and  11.45  P.  M., 
daily,  and  at  such  other  times  as  the  Signal  Office  should  call 
for  them.  These  circuits  were  in  addition  to  the  scheduled  circuits 
upon  which  the  regular  tri-daily  Weather  Reports  were  to  be 
transmitted.  It  was  represented  that  it  was  necessary  for  the  Chief 
Signal  Officer  to  be  able  to  communicate  directly  and  promptly 
with  the  Observer  Sergeants  at  the  three  cities  named,  during  the 
time  the  regular  reports  were  being  received  at  the  Signal  Office, 
and  without  interrupting  them  or  otherwise  interfering  with  their 
transmission.  Desiring  to  provide  every  facility  required  for  the 
efficient  transaction  of  this  business,  the  Company  consented  to 
supply  these  special  circuits. 

The  new  arrangement  had  been  in  force  but  a  short  time, 
however,  when  it  was  ascertained  that  these  special  circuits  were 
being  put  to  other  uses  than  the  correction  of  errors  in  reports 
and  other  matters  of  importance  directly  connected  with  their 
transmission.  It  was  found  that  they  were  being  taken  for  pur- 


83 

poses  of  display,  during  the  most  crowded  hours  of  the  day,  when 
they  were  most  useful  to  the  public,  and,  therefore,  most  valuable 
to  the  Company.  Nor  were  the  improper  uses  of  the  Company's 
wires  confined  to  those  composing  the  three  special  circuits. 
Other  and  equally  important  circuits,  including  those  connecting 
the  Atlantic  and  Pacific  coasts,  were  sometimes  taken  by  the 
Signal  Office,  without  notice  to  or  permission  of  the  Company, 
to  give  exhibitions  to  invited  guests,  and  to  promote  the  con 
venience  or  gratify  the  whims  of  its  attaches. 

The  following  are  copies  of  some  of  the  messages — reams  of 
which  are  now  in  the  Company's  possession — sent  from  and  ex 
changed  with  the  Signal  Office  over  circuits  provided  by  the 
Company  with  the  understanding  that  they  were  to  be  used  only 
in  emergencies,  and  for  the  transmission  of  business  of  special 
importance.  The  cost  of  this  service,  computed  at  ordinary  rates, 
would  amount  to  thousands  of  dollars : 

CONVERSATION  BETWEEN  THE  SIGNAL  OFFICE  AT  WASH 
INGTON,  NEW  YORK,  BOSTON  AND  CHICAGO,  August 
7th,  1871. 

Signal  Office  to  Boston.— The  Secretary  of  War  asks,  "What  is  the  weather  and 
"  thermometer  ?  Is  Observer  about  there  ?  Tell  him  yourself,  if  not." 

Boston  to  Signal  Office. — "Weather  hazy — pleasant — East.  Don't  know  about 
"  thermometer." 

Signal  Office  to  Boston.—"  Thanks  of  the  Secretary  of  War.     0.  K." 

(SIGNAL  OFFICE  CALLS  NEW  YORK.) 

Signal  Office  to  New  York. — "What  wires  are  you  working  to  Chicago?" 
New  York  to  Signal  Office. — "We  are  working  three  wires  to  Chicago." 
Signal  Office  to  New  York. — "  Can  you  stay  on  hero  for  a  few  minutes?" 

New  York  to  Signal  Office.—  "Tery  busy,  but  will  do  it.  Jump  in  at  end  of 
"message." 

(SIGNAL  OFFICE  CALLS  CHICAGO.) 

Signal  Office  to  Chicago.—"  Is  S.  or  G.  there  ?" 

Chicago  to  Signal  Office. — ;'  Who  do  you  want?" 

Signal  Office  to  Chicago.—"  Is  G-.  or  S.  there  ?" 

Chicago  to  Signal  Office. — "Yes,  wait  a  minute.     I'll  get  them." 

Signal  Office  to  Chicago. — "  G-ood  morning.  The  Secretary  of  War  is  here  again. 
"Are  you  working  through  to  San  Francisco?  Can  you  put  West  on  for  a 
"minute?" 

Chicago  to  Signal  Office. — "West  0.  K.,  can  put  it  on  here,  but  it  will  be  slow 
"  work.  I  can  repeat  it  quicker  than  you  can  work  through,  and  make  it  appear  as 
"  though  you  were  working  direct.  Won't  that  do  ?" 

Signal  Office  to  Chicago. — "  He  has  nothing  important  to  say.  Only  wanted  to 
"  see  if  wires  would  work.  He  has  been  trying  the  Franklin  lines,  but  there  is  not 
"  much  show  for  them." 

Chicago  to  Signal  Office. — "I'll  put  it  on  if  you  think  best;  but  this  is  the  very 
"  worst  time  of  day  for  our  business." 

Signal  Office  to  Chicago. — "  Let  it  go  till  some  other  day." 


84 

Chicago  to  Signal  Office. — "  Suppose  you  arrange  for  to-morrow  morning,  say 
;  10.30,  Washington  time,  then  I  will  have  every  thing  ready.  I  am  short  of 
wires  and  crowded  with  business  now." 

Signal  Office  to  Chicago.—"  0.  K.    Will  let  you  know.     12.30." 


SIONAL  OFFICE,  WASHINGTON,  WITH    SAN    FRANCISCO  AND 
INTERMEDIATE    STATIONS,  1O  A.  M.,  August  9th,  1871. 

Signal  Office  to  Chicago.— "  Is  Mr.  Swain  in  the  office  ?" 
Chicago  to  Signal  Office.—"  Yes." 

Signal  Office  to  Chicago. — "  The  Secretary  of  War  wants  to  see  how  soon  we 
"can  get  San  Francisco.  Please  connect  the  wires  through." 

Chicago  to  Signal  Office. — "I  will  put  you  in  communication  with  San  Francisco 
"  now.  Wait  a  moment." 

(The  wires  were  connected  through,  and  San  Francisco  answered  the  call  at 
10.12.) 

Signal  Office  to  San  Francisco. — "  Good  morning.  The  Secretary  of  War  is  here. 
"  Please  give  him  the  state  of  the  weather  and  thermometer  at  San  Francisco.  Is 
"  Carusi  about  ?" 

San  Francisco  to  Signal  Office. — "Good  morning,  Mr.  Secretary.  It  is  cloudy. 
"No  wind.  Thermometer  54.  Mr.  Carusi  is  not  in  the  office,  but  we  can  have 
"  him  here  in  five  minutes." 

Signal  Office  to  San  Francisco. — "Please  call  Observer."  (The  Signal  Office  here 
made  some  unintelligible  signals.) 

Chicago  to  Signal  Office. — "  Who  are  you  calling?" 
Signal  Office  to  Chicago. — "Is  Cheyenne  and  Corinne  here?" 
Chicago  to  Signal  Office. — "  Yes." 
Corinne  to  Chicago. — "  Do  you  want  us?" 

Chicago  to  Corinne. — "Yes.  Washington  is  here,  and  wants  you.  Answer 
"him." 

Signal  Office  to  Corinne.  "  Please  give  the  Secretary  of  War  the  state  of  the 
"  weather." 

Corinne  to  Signal  Office. — "  Little  hazy.     Thermometer  75." 
Signal  Office  to  Corinne. — "0.  K." 

(SIGNAL  OFFICE  CALLS  CHEYENNE,  AND  is  IMMEDIATELY  ANSWERED.) 
Signal  Office  to  Cheyenne. — "  What  is  state  of  the  weather?" 
Cheyenne  to  Signal  Office. — "Very  cloudy  and  windy.    Looks  like  rain." 

(SIGNAL  OFFICE  CALLS  SAN  FRANCISCO.) 
Signal  Office  to  San  Francisco. — "Has  Carusi  come?" 

San  Francisco  to  Signal  Office. — "  He  will  be  here  in  a  minute.  Boy  gone  after 
"  him.  Lillis  sends  compliments  to  the  Secretary." 

Signal  Office  to  San  Francisco. — "The  Secretary  of  War  sends  compliments. 
"Weather  broiling  hot  here." 

San  Francisco  to  Signal  Office. — "  Here  is  Carusi." 

Signal  Office  to  Observer,  San  Francisco. — "How  far  is  your  office  from  the  Tele 
graph  Office  ?'  "(Signed),  GEN.  MYER." 


85 

San  Francisco  to  Signal  Office. — "It  is  one  square  from  the  office." 

Signal  Office  to  Observer,  San  Francisco. — "  Have  you  a  barometer  reading  ready, 
"  or  would  you  have  to  make  one  ?" 

Signal  Office  to  Managers  and  Operators  at  Stations  between  Washington  and  San 
Francisco. — "The  Secretary  of  War  tenders  his  thanks  and  congratulations  to  all 
"managers  and  operators  for  their  success  in.  working  this  morning.  10.50  A.  M. 
"  The  wires  worked  mce!y.  Two  minuter  only  were  occupied  in  obtaining  direct 
"  communication  between  Washington,  and  San  Francisco." 


CONVERSATION  BETWEEN  SIGNAL  OFFICE  AND  CINCINNATI, 
at  3.2O  P.  M.,  September  6,  1871. 

Signal   Office  to  Cincinnati. — "  Good  afternoon.     Do  you   know  an    operator 

"  named    B.  F.  H ,  now  at  Council   Bluffs,  said  to    have  worked    in   your 

"  office  ?" 

Cincinnati  to  Signal  Office. — "  Wait  a  minute.     Good  afternoon.     I  had  a  man 

"  here  named  H .     He  was  not  much  as    an    operator.     Very  steady  man. 

"  Don't  remember  initials.     Don't  find  his  name  now  on  my  books.    He  afterwards 
"  went  to  Omaha.     Our  manager  there  can  tell  more  about  his  ability  than  I  can." 

Signal  Office  to  Cincinnati. — "  Can  you  conveniently  find  out  for  me  his  quali- 
"  fications,  habits,  character,  pedigree,  &c.  ?  Maybe  Mr.  Bliss  would  know. 
14  Would  like  to  know  where  he  came  from." 

Cincinnati  to  Signal  Office. — u  His  initials  are  H.  H.  H .     I  will  inquire 

"and  notify  you." 


CONVERSATION     BETWEEN    SIGNAL    OFFICE    AND    CHICAGO, 
September  16th,  1871,  3.4O  P.  M. 

(SIGNAL  OFFICE  CALLS  CHICAGO.) 

Signal  Office  to  Chicago. — "  Is  it  S.  or  G.,  or  is  Maynard  there  ?" 

Chicago  to  Signal  Office. — "  It  is  G.  What  can  I  do  for  the  Government  to-day?" 

Signal  Office  to  Chicago. — "  Good  morning.  Valuable  service,  as  usual.  In 
"  explanation  of  loss  of  49  and  50  we  have  had  report :  '  Can't  raise ;  generally  at" 
"night.'  Wanted  to  know  whether  that  meant:  'Can't  raise  some  office,'  or 
"  something  else.  Do  you  know  about  it  ?  Is  there  a  chance  to  tighten  screws 
"  on  North- Western  ?" 

Chicago  to  Signal  Office. — "  0.  K.  I  believe  that  has  reference  to  office  through 
"  which  the  midnight  reports  from  the  North  are  expected  to  be  passed.  The 
"  record  book  very  frequently,  and  I  think  generally,  reads  at  night.  Can't  raise 
"  Fort  Howard.  We  were  told  by  Green  Bay,  I  think  it  was,  that  he  would  not 
"  sit  up  for  signals  without  an  order  from  his  superintendent,  Mr.  Robertson.  I 
"  inferred,  from  the  style  of  his  language,  that  they  were  a  kind  of  self-governing 
"  people  in  Green  Bay,  and  concluded  that  the  service  was  not  organized  in  that 
"  direction." 

Signal  Office  to  Chicago. — "  They  report  Fort  Howard  has  a  wire  run  into  his 
"house  and  gets  extra  salary  for  doing  the  signal  business.  Wish  you  would 
"  keep  watch  of  them,  and  if  there  is  any  reason  why  the  wire  is  not  in  order,  and 
"  signals  don't  come,  post  me.  Meanwhile  I'll  pay  my  respects  to  them  through 
"the  Superintendent.  Has  the  Observer  supplied  you  with  carbon  paper 
"  enough  ?" 

Chicago  to  Signal  Office. — "  Yes,  he  has,  thank  you.    We  will  do  as  you  desire." 


Signal  Office  to  Chicago. — "  Please  take  this  message : 

to  SERGEANT 
tation  ?     Am 

"(Signed),  H.  W.  HOWGATB.' 


11  From  SIGNAL  OFFICE,  WASHINGTON,  16,  to  SERGEANT  A.  BRUNER,  MILWAUKEE. 
"  Is  Lieutenant  Adams  inspecting  your  station  ?     Answer. 


CONVERSATION     BETWEEN     SIGNAL     OFFICE      AND     INDIAN 
APOLIS,  1O  A.  M.,  October  9th,  1871. 

Signal  Office  to  Indianapolis. — "  Have  you  got  any  more  signals  ?" 

Indianapolis  to  Signal  Office. — "  I  have  tried  every  possible  way  to  get  Keokuk, 
"Davenport  or  Milwaukee  signals,  but  so  far  no  show." 

Signal  Office  to  Indianapolis. — "  Much  obliged.     Will  you  be  in  office  this  P.  M."? 
Indianapolis  to  Signal  Office. — "Yes,  all  day." 

Signal  Office  to  Indianapolis. — "  Will  you  please  let  me  know,  say  about  two 
"o'clock,  what  is  the  situation  at  Chicago — whether  prospect  of  getting  afternoon 
"  signals  through  regularly  ?  If  not,  want  to  try  to  get  other  route.  Can  you  get, 
"  probably,  a  wire  to  Omaha,  if  Chicago  wires  are  not  all  right  ?" 

Indianapolis  to  Signal  Office. — "Probably  may  get  one  round  Ko.  Will  try  to  get 
"an  opening  somewhere  beibre  atternoon  signals.  Tiie  situation  at  Chicago  at 
"  present  is  rather  gloomy.  Thirty  squares  are  destroyed." 

Signal  Office  to  Indianapolis. — "All  right,  all  right.  Can  you  give  me  the  situa- 
"  tion  at  Chicago  now?  The  Secretary  of  War  wants  to  know." 

Indianapolis  to  Signal  Office. — "  The  latest  from  Chicago  is  a  message  from  Mr- 
"Wilson,  Superintendent  at  Chicago,  to  Mr.  Orton,  New  York,  in  which  he  says 
"thirty  squares,  the  entire  business  portion  of  Chicago,  has  been  destroyed.  The 
"  fire  is  still  raging.  This  message  came  from  Galena  direct  from  Chicago." 

Signal  Office  to  Indianapolis. — "  Much  obliged.  Let  me  know  if  there  is  any 
"  change  there,  please." 

Indianapolis  to  Signal  Office. — "  Will  post  you  of  any  further  information." 

CONVERSATION  BETWEEN  SIGNAL  OFFICE  AND  CINCINNATI, 
10    A.  M.,    October   17th,    1871. 

Signal  Office  to  Cincinnati. — "Say,  Ham,  get  two  signals,  47  and  70." 
Cincinnati  to  Signal  Office. — "  Wait  a  minute." 
Signal  Office  to  Cincinnati.—"  Find  them." 
Cincinnati  to  Signal  Office. — "Here  are  47  and  70. 
Signal  Office  to  Cincinnati. — "  Please  repeat  them." 

Cincinnati  to  Signal  Office.— "0  3270 
08  8 

06171 
20000 
00947 
09646 
10172 
5300  0." 

Signal  Office  to  Cincinnati. — "Thank  you.  It  is  awful  cold;  eight  degrees  below 
"zero.  Please  rush  these  Government." 

Signal  Office,  Washington,  D.  C.,  October  Vlth. — "Observer,  Keokuk.  Repeat 
"  temperature,  this  morning's  report,  quick. 

"  H.  W.  HOWGATE, 

"  A.  S.  0.  &  Asst." 


87 

Signal  Office,   Washington,  D.   <?.,   October  llth. — "Observer,  Corinne.    Eepeat 
"  temperature,  this  morning's  report,  quick. 

"H.   W.   HOWGATE, 

11  A.  S.  O.&Asst." 


CONVERSATION    BETWEEN   SIGNAL    OFFICE   AND    AUGUSTA, 
Ga.,  1O  A.   M.,  Oct.  31st,  1871. 

Signal  Office  to  Augusta. — "  Can  I  see  G.  a  minute?" 
Augusta  to  Signal  Office. — "  Go  ahead." 

Signal  Office  to  Augusta. — "Good  morning.  How  do  you  receive  reports  27, 
"28  and  55  from  New  Orleans  ?  Are  they  generally  in  before  yoct  send  yours  on 
"coast  circuit? 

Augusta  to  Signal  Office. — "  No.  They  come  about  the  same  time,  when  we 
"  start,  and  that  is  a  little  ahead  of  schedule  time.  We  always  try  to  get  ours  and 
"coast  South  first,  so  they  can  send  them  West.  72  is  generally  late;  the  rest 
"pretty  prompt." 

Signal  Office  to  Augusta. — "  Think  of  changing  schedules  so  as  to  have  you  send 
"  those  four  reports  on  coast  circuit,  to  save  time  here  and  at  C.  Can  you  do  it 
"  as  well  as  not  ?  Probably  it  will  put  your  sending  time  back  about  five  minutes." 

Augusta  to  Signal  Office. — "  Do  you  mean  that  it  will  make  it  earlier  or  later?" 
Signal  Office  to  Augusta. — "  Later." 

Augusta  to  Signal  Office. — "  Yes.  We  can  do  it  easy  enough  then.  See  no  reason 
"  why  it  couldn't  be  done.  We  get  half  an  hour  before  you  do  on  coast." 

Signal  Office  to  Augusta. — "All  right.  Is  there  anything  new  that  way  about 
"signals — anything  want  tightening?" 

Augusta  to  Signal  Office. — "No.  The  new  Observer  sticks  to  his  office  very 
"  closely,  and  seems  to  attend  to  his  business." 


CONVERSATION     BETWEEN    SIGNAL    OFFICE    AND    CHICAGO, 
at  3  o'clock   P.  M.,   November   1,  1871. 

Signal  Office  to  Chicago.—"  Is  Sholes  there  ?" 

Chicago  to  Signal  Office. — "Here  is  York  or  Swain." 

Signal  Office  to  Chicago. — "  Wanted  to  speak  with  Sholes  a  minute,  if  he  is  in." 

Chicago  to  Signal  Office. — "No.     Here  is  York,  though." 

Signal  Office  to  Chicago.— "  When  will  S.  be  in?" 

Chicago  to  Signal  Office. — "He  ought  to  be  here  now.     Time  for  his  return." 

Signal  Office  to  Chicago. — "Tell  him  want  to  see  him.     Who  is  Superintendent  of 
"Portland  (Oregon)?" 

Chicago  to  Signal  Office. — "  Half  minute.      Asking  San  Francisco  now.      San 
"  Francisco  says  it  is  C.  Plummer.     Here  Sholes  comes." 

Signal    Office   to  Chicago. — "  Sholes,    do  you  remember  the  matter  we  were 
"speaking  ot  eve  I  left  S.  D.  ?" 

Chicago  to  Signal  Office. — "  Good  afternoon.    Yes;  presume  you  mean  regarding 
"situation  in  Washington  ?" 

Signal  Office  to  Chicago. — "How  does  the  man  feel  about  it  now?     How  much 
"will  he  take?" 

Chicago  to  Signal  Office. — "Where  would  he  be  located?" 


88 

Signal  Office  to  Chicago. — "Here.  Some  telegraphing— some  clerking — with  me. 
"  You  know  about  what  situation  is  worth  here,  and  you  also  know  what  Chicago  is 
"  now.  We  offer  any  (lost  about  ten  words  here).  Don't  know  how  much  can  offer. 
"  Want  find  out  what  will  cost,  then  get  authority.  Don't  remember  what  he  got 
41  there." 

Chicago  to  Signal  Office. — "  How  soon  would  you  want  him  ?  Can  you  wait  few 
"days  for  a  letter?" 

Signal  Office  to  Chicago. — "Want  him  soon  as  possible.  If  case  hopeful,  will 
"you  write  particulars  how  much  he  got  there?" 

Chicago  to  Signal  Office. — "  He  can't  decide  to-day.  He  gets  115.  He  will 
"  write  you  if  you  can  wait  few  days  for  a  letter." 

Signal  Office  to  Chicago. — "Tell  him  to  do  so.  I  will  also  write.  G-ood  afler- 
"  noon.  Thank  you." 


CONVERSATION      BETWEEN      SIGNAL     OFFICE      AND     PHILA 
DELPHIA,  1.O7  P.  M.,  Nov.  9th,  1871. 

Signal  Office  to  Philadelphia. — "  Is  Robinson  there?" 

Philadelphia  to  Signal  Office. — "  Kobinson  is  out  of  town.     G-.  is  here." 

Signal  Office  to  Philadelphia. — "  I  wish  to  see  him  a  minute." 

Philadelphia  to  Signal  Office. — "  In  half  a  minute.  He  is  very  busy  with  Pitts- 
"  burgh.  Will  be  here  in  a  minute." 

Signal  Office  to  Philadelphia. — "Do  you  know  anything  about  the  small-pox 
"  business — any  way  to  get  vaccine  matter  reliably  good?" 

Philadelphia  to  Signal  Office. — "Disease  don't  seem  to  decrease  much.  Think 
"  you  could  get  it  from  any  reliable  physician  here." 

Signal  Office  to  Philadelphia. — "  I  supposed  so.  Wish  you  would  ask  G.  or  E. 
"  if  they  know  such  a  man,  and  can  get  me  some  conveniently.  I  don't  know  any 
"  one  to  send  to  for  it." 

Philadelphia  to  Signal  Office. — "G.  says,  '  Don't  know  of  any  one  just  now.  Will 
"  let  you  know  soon.  Will  inquire.'  " 

Signal  Office  to  Philadelphia.— "  Much  obliged." 
Philadelphia  to  Signal  Office.—11  Not  at  all." 


CONVERSATION     BETWEEN     SIGNAL    OFFICE    AND    CHICAGO, 
November   6th,  1871,   1O.11  A.  M. 

Signal  Office  to  Chicago.— "la  Sholes  there?" 

Chicago  to  Signal  Office.—11  Yes." 

Signal  Office  to  Chicago.—"  At  key  ?" 

Chicago  to  Signal  Office. — "  No." 

Signal  Office  to  Chicago. — "  Please  ask  him  here." 

Chicago  to  Signal  Office. — "  Good  morning.  Your  letter  was  received  yesterday.' 
"  He  expressed  himself  as  much  obliged  for  first  choice,  but  under  the  circum- 
"  stances,  enlistment,  &c.,  there  is  hardly  inducement  enough.  With  very  little 
"  extra  hours'  work  every  night  can  make  it  130  here.  Hope  it  has  not  incon- 
"venieoced  you  or  your  plans." 

Signal  Office  to  Chicago. — "Good  morning.  Received  no  inconvenience.  Sorry 
l;  can't,  do  better.  Have  to  come  to  it  gradually,  you  see.  Glad,  however,  he  is 
"  doing  so  well." 


89 


Chicago  to  Signal  Office. — "Tell  him  I  am  all  right  for  the  present.  Are  you 
"  coming  out  this  way  again  soon?" 

Signal  Office  to  Chicago. — "Can't  tell  when.  Hope  to  bo  able  to  do  so  before 
"  long." 

Chicago  to  Signal  Office. — All  right.  Will  see  you  when  you  come.  It's  likely 
u  that  I  shall  be  in  Washington  this  winter  on  a  visit.  Will  see  you  then." 

Signal  Office  to  Chicago. — "  Hope  so.     Good  morning." 

CONVERSATION    BETWEEN  SIGNAL    OFFICE     AND     CHICAGO, 
November  18,  1871,  11.19  A.  M. 

Signal  Office  to  Chicago. — "  Please  ask  Chief  if  he  can  tell  me  the  nature  and 
"  extent  of  the  storm  near  Omaha." 

Chicago  to  Signal  Office. — "  Good  morning.  Mr.  M.  will  do  so  in  a  minute.  Had 
"  a  very  severe  wind  and  snow  storm  west  of  here  last  night.  Our  masts  at  the 
11  Missouri  River  blown  down.  All  lines  down  between  Council  Bluffs  and  Omaha. 
"Don't  know  how  far  west  the  storm  extended.  Wo  are  sending  messengers  from 
"  Council  Bluffs  to  Omaha.  May  have  some  signal  reports  after  awhile." 

Signal  Office  to  Chicago. — "Has  the  storm  passed  away,  or  is  it  moving  east?" 

Chicago  to  Signal  Office. — "  It  is  moving  east.  Cautionary  signals  are  up  here. 
"  It  is  raining  at  Bluffs  now." 

Signal  Office  to  Chicago. — "  Thanks.    Martin  R applies  for  a  place.    Want 

"  a  first  class  man  to  enlist  at  120  dollars.     Can  you  send  such  a  man  to  me?" 

Chicago  to  Signal  Office. — "R not  first  class;  would  probably  do,  however. 

"  If  he  wishes  to  go  I'll  arrange  to  relieve  him.     Know  of  no  one  now  that  can  be 
"  spared.     Are  you  in  a  hurry?" 

Signal  Office  to  Chicago. — "No.     Want  none  but  reliable  men." 

Chicago  to  Signal  Office. — "He  is  all  right,  but  I  don't  consider  him  first  class 
"  operator." 

Signal  Office  to  Chicago.— "  All  right." 


CONVERSATION   BETWEEN  SIGNAL  OFFICE  AND  BALTIMORE, 
November  21st,  1871,  2.3O  P.  M. 

Signal  Office  to  Baltimore— " Is  W.  there?" 
Baltimore  to  Signal  Office. — "  No,  sir.    A.  W.  is  here." 
Signal  Office  to  Baltimore. — "  Can  I  see  him  a  minute  ?" 
Baltimore  to  Signal  Office. — "Yes;  go  ahead." 

Signal  Office  to  A.  W.,  Baltimore. — "  Good  morning.  Can  you  tell  mo  who  is  tho 
"  best  oculist  in  Baltimore  ?  Friend  wants  to  find  one  there." 

Baltimore  to  Signal  Office. — "  Yes.  Dr.  Reuling  has  the  reputation  of  being  the 
"best  here.  His  office  is  on  North  Charles  street,  between  Mulberry  and  Saratoga 
'  streets.  He  has  performed  some  wonderful  cures." 

Signal  Office  to  Baltimore. — "Much  obliged.     All  right." 

SIGNAL  OFFICE,  WASHINGTON,  WITH  CINCINNATI,  1.33  P.  M., 
February  14th,  1872. 

Signal  Office  to  Cincinnati. — "  Give  us  Chicago  a  minute." 
(CHICAGO  WIRB  CONNECTED.) 


90 

Signal  Office  to  Chicago. — "  Can  I  see  one  of  your  chiefs  a  mLmte  ?" 
Chicago  to  Signal  Office. — "Yes." 

Signal  Office  to  Chicago. — "Good  afternoon.    You  know   McC ,  at  the 

"  Supply  Department.     His  daughter  here  would  like  to  know  if  he  is  at  home. 
"Understands  he  was  going  to  Wisconsin." 

Chicago  to  Signal  Office, — "Will  see.     Can't  get  the  office  now.     Can  find  out 
"  and  send  you  a  message  soon.     Operator  there  has  gone  to  dinner." 

Signal  Office  to  Chicago. — "Please  do.    If  away,  do  they  know  when  he  will 
"return?     How  do  you  get  my  signals?" 

Chicago  to  Signal  Office. — "  Yery  well  now.    Bad  day  to-day,  or  was  this  morn- 
"ing.     Heavy  wind  broke  wires.     I'll  let  you  know  as  soon  as  I  can  get  that  off." 

Signal  Office  to  Chicago. — "  Mrs.  Mack  arranging  to  go  home  when  she  finds  that 
"ho  is  there.     0.  K." 

SIGNAL  OFFICE  WITH  CINCINNATI,   11.33    A.    M.,   February  15th, 
1872. 

Signal  Office  to    Cincinnati. — "Can  you    send  a  message  to  Chicago  and  get 
"answer  right  away?" 

Cincinnati  to  Signal  Office. — "  Yes." 
Signal  Office  to  Cincinnati. — "Take  this." 
"Prom  SIGNAL  OFFICE,  WASHINGTON,  15th, 

"  To  J.  K.  McCONAUGHEY,   SUPPLY  DEPARTMENT,    CHICAGO.  ' 

"Your  wife  leaves  at  7.45  this  evening  via  Wheeling  and  Columbus.     Can  you 
"  meet  her  on  the  road  ?     I  am  waiting  answer. 

"(Signed),  GEO.  C.  MAYNARD." 

"  Chicago  should  be  able  to  get  answer  at  once,  if  he  is  at  office.     If  you  work 
"  direct  to  the  Supply  Department,  send  there." 

Cincinnati  to  Signal  Office,  at  12.20  P.  M. — "I  requested  Chicago  to  get  quick 
"  answer  to  you.     Said  he  would.     I'll  ask  him  again." 

Signal  Office  to  Cincinnati.— "Please  do." 


Feb.  19th,  1872,  at  6.1S  P.  M. 

(SIGNAL  OFFICE  TOOK  THE  CIRCUIT  WITH  CINCINNATI.) 
Signal  Office  to  Cincinnati.—"  Is  Horton  in  ?" 
Cincinnati  to  Signal  Office.—11  Yes." 

Signal  Office  to  Cincinnati. — "  Good  evening.  Received  your  letter  this  evening. 
"  Talked  the  matter  up  with  Chief.  It  will  probably  be  0.  K.  now.  You  need  not 
"  say  so,  but  likely  one  of  the  trio  will  come  ;  but  your  man." 

Cincinnati  to  Signal  Office. — "Was  afraid  they  had  been  trying  to  oust  him.  He 
"  is  really  very  capable,  and  was  'propery '  division  labor  here.  There  would  be  no 
"  trouble,  but  fact  is,"  &c. 

CONVERSATION  BETWEEN  SIGNAL  OFFICE  AND  BALTIMORE, 
February  28th,  1872,  12  P.  M. 

Signal  Office  to  Baltimore.—"  Can  I  see  Wolf  a  minute?"  To  Wolf.— "Do  you 
"know  at  what  time  in  afternoon  and  evening  trains  leave  Baltimore  for  Wash- 
"  ington  ?" 

Baltimore  to  Signal  Office.— "To  G.  C.  M.  There  is  one  leaves  at  2  P.  M.,  one 
"  at  3.50  P.  M.,  one  at  4.40  P.  M.,  one  at  8.30  P.  M. ;  and  one  about  9.30  P.  M." 


91 

Signal  Office  to  Baltimore. — "  Thanks.  That's  trains  enough.  May  drop  in  on 
"you  to-morrow." 

Baltimore  to  Signal  Office. — "  Do.     Will  be  glad  to  see  you." 

It  will  be  noted  that  the  occupation  of  the  wires  which  these 
conversations  illustrate  was  at  other  times  than  the  regular 
hours  named  in  the  -schedules  for  making  up  the  special  circuits ; 
and  it  can  hardly  fail  to  excite  surprise  that  the  Signal  Offico 
should  interrupt  and  suspend  the  business  of  the  public  on  jfche 
great  commercial  lines  of  the  country  during  the  most  active 
hours  of  the  day  with  such  trifling  matters.  The  propriety  of 
exhibiting  the  working  of  the  wires  to  the  Honorable  Secretary 
of  War  is  not  questioned;  yet  it  would  have  pleased  the  Com 
pany  better  to  have  received  an  intimation  that  it  would  be 
agreeable  to  him  to  accept  a  courtesy  from  it  than  to  learn 
afterwards  that  it  had  been  extended  without  the  knowledge  of  its 
officers.  But  the  propriety  of  taking  the  wires  for  the  purpose  of 
inquiring  the  times  of  departure  of  trains,  for  negotiating  the 
enlistment  of  Observer  Sergeants,  for  the  purchase  of  vaccine 
matter,  or  any  of  the  various  other  purposes  not  directly  connected 
with  Commerce  and  Agriculture,  is  not  apparent,  even  if  the  Com 
pany  was  to  be  compensated  for  their  use.  But  when  it  is 
understood  that  the  Company  was  not  deemed  entitled  to  com 
pensation  for  such  occupation  of  its  wires,  and  that  no  complete 
record  was  kept  whereby  it  would  be  possible  to  ascertain  the 
extent  to  which  it  was  carried  on,  it  will  not  excite  surprise 
that  the  Company  became  anxious  to  be  relieved  of  so  grievous 
a  burden. 

Another  serious  difficulty  arose  from  the  issuing  of  orders 
from  the  Signal  Office  to  the  Company's  employes.  When  the 
arrangement  with  the  Signal  Office  was  made,  it  was  understood 
that  all  changes  or  modifications  of  the  service  should  be  promul 
gated  to  the  employes  of  the  Company  through  its  officers,  but 
in  several  instances  this  course  was  not  adopted,  the  Signal  Office 
making  such  changes  without  notice  to  or  the  consent  of  the 
Company.  Thus,  in  August,  1871,  reports  from  Portland,  Boston, 
New  York  and  Baltimore  were  sent  to  New  Orleans  from  Augusta 
without  the  knowledge  of  the  Company's  officers,  and  in  Sep 
tember  other  changes  were  made  in  the  transmission  of  reports 
over  the  southern  circuit. 

In  October  arrangements  were  made  with  the  Company  for 
holding  offices  open  for  the  reception  of  Storm  Signal  Reports. 
On  the  20th  of  December  orders  were  sent  by  the  Signal  Office 
to  several  of  these  offices,  notifying  them  of  the  discontinuance  of 
the  reports  for  the  winter,  but  no  notice  of  such  action  was  sent 
to  the  Executive  Office  of  the  Company,  and  the  fact  was  only  inci 
dentally  learned  through  the  offices  which  had  been  instructed.  In 
order  to  prevent  the  confusion  and  derangement  of  business,  re 
sulting  from  the  issuing  of  instructions  by  the  Signal  Office  over 
the  wires  to  the  employes  of  the  Company,  it  became  necessary 
to  give  notice  that  all  orders  relating  to  the  working  of  the 


92 

Company's  lines  which   did   not   come   from   the  proper  officers  of 
the  Company  would    be  disregarded. 

Notwithstanding  the  frequent  complaints  and  urgent  protests  of 
the  Company  these  abuses  were  not  remedied.  It  became  neces 
sary,  therefore,  for  the  protection  of  the  Company's  interests,  that 
some  decided  action  should  be  taken;  and  accordingly,  after  full 
consideration  of  the  subject  by  the  Executive  Committee,  notice  was 
given  to  the  Honorable  Secretary  of  War,  by  letter,  dated  March 
4,  1872,  of  a  desire  to  terminate  the  arrangement  at  the  expiration 
of  the  year  for  which  it  had  been  made;  but,  at  the  re 
quest  of  the  Signal  Office,  the  service  was  continued  until  the 
end  of  the  fiscal  year,  June  30,  1872.  During  the  interval  the 
Company  was  invited  to  send  representatives  to  meet  those  of 
the  Signal  Office  at  Washington,  on  the  second  day  of  May, 
1872,  for  conference  upon  the  matters  pending  between  the  United 
States  and  the  Telegraph  Companies.  Pursuant  to  this  invitation, 
the  representatives  of  the  Company  attended  at  the  Signal  Office 
on  that  day,  and  being  invited  to  submit  a  proposition  for 
continuing  the  transmission  of  Weather  Eeports,  they  submitted  the 
following  : 

"To  transmit  the  Weather  Reports  for  the  year  succeeding  May 
24th,  1872,  substantially  on  the  basis  fixed  by  the  Postmaster-Gen 
eral  for  the  transmission  of  telegraphic  communications  other  than 
Signal  Service  Messages  and  Reports — that  is  to  say,  one  cent  per 
word  for  each  circuit,  or  unit  of  distance  of  250  miles,  or  fractional 
part  thereof,  through  which  it  shall  be  transmitted — the  distance  to  be 
computed  by  adding  the  distances  from  one  station  to  another,  where 
messages  are  dropped  or  received  on  the  route  between  the  initial  and 
terminal  stations  of  each  working  circuit,  and  in  addition  thereto  one 
fourth  of  one  cent  per  word  for  each  drop  at  such  intermediate  sta 
tions  ;  all  words  to  be  counted,  and  no  communication  to  be  at  a  rate 
less  than  twenty-five  cents  on  each  circuit."  » 

It  will  be  seen  that  this  was  an  offer  to  transmit  the  Weather 
Reports  over  special  circuits  at  fixed  times,  for  the  compensation 
established  by  the  Postmaster-General  for  other  Government  busi 
ness,  except  for  the  extra  service  required  to  take  copies  of  the 
reports  at  intermediate  stations  on  the  circuits  over  which  they 
were  transmitted. 

In  the  ordinary  transmission  of  messages  two  operators  are 
required — one  to  send,  the  other  to  receive.  The  time  of  two 
operators  engaged  at  intermediate  stations,  in  taking  what  are 
technically  called  "  drop "  copies,  is  worth  to  the  Company  pre 
cisely  the  same  as  if  they  were  engaged  in  sending  and  re 
ceiving  messages  in  the  ordinary  way.  But,  as  in  the  case  of 
the  Weather  Reports,  the  operators  connected  therewith  were  all 
on  the  same  wire  in  any  circuit,  it  was  deemed  equitable  to  treat 
four  drops,  requiring  four  operators,  as  equivalent  to  the  cost  of 
ordinary  transmission  on  a  circuit  of  250  miles,  and  it  was  there 
fore  proposed  to  charge,  in  addition  to  the  one  cent  per  word 
for  each  250  miles,  one  fourth  of  one  cent  per  word  for  each 
drop  at  the  intermediate  stations. 


93 

This  proposition  was  declined  by  the  representatives  of  the 
Signal  Office,  and  no  offer  was  made  then  or  subsequently  to  the 
Company  for  the  continuance  of  the  service.  But  the  Congress 
then  in  session  enacted  a  provision  to  the  appropriation  for 
continuing  the  Weather  Reports  during  the  next  fiscal  year,  for 
subjecting  to  severe  penalties  any  Telegraph  Company  which 
should  neglect  or  refuse  to  perform  any  telegraphic  service  for 
the  United  States  required  by  any  officer  thereof,  at  a  rate  of 
compensation  fixed  by  the  Postmaster-General.  The  Company 
was  informed  that  this  provision  was  drafted  and  submitted  to 
the  Committee  on  Appropriations  by  the  representatives  of  the 
Signal  Office,  and  its  enactment  urged  by  them. 

At  an  interview  between  the  representatives  of  the  Signal 
Office  arid  of  the  Company,  after  the  adjournment  of  Congress, 
and  before  the  expiration  of  the  fiscal  year,  the  former  distinctly 
declined  to  negotiate  for  continuing  the  service,  alleging  as  a 
reason  that  they  had  the  right  to  require  its  performance.  This 
right  was  not  admitted  by  the  Company,  and  the  service 
terminated. 

The  foregoing  statements,  together  with  those  made  in  previous 
communications,  contain  all  that  is  material  concerning  the  rela 
tions  of  the  Signal  Office  and  of  this  Company  in  connection  with 
the  transmission  of  the  Weather  Reports,  except  the  discussion  of 
the  subject  before  the  Committee  on  Appropriations  of  the  House 
of  Representatives.  As  the  official  record  of  the  proceedings  be 
fore  the  Committee  has  been  published,  it  is  not  deemed  neces 
sary  to  make  further  reference  thereto  in  this  connection. 

It  is  gratifying  to  the  Company  to  know  that  the  Signal  Of 
fice  was  fcable  to  make  satisfactory  arrangements  for  the  transmis 
sion  of  the  Weather  Reports  by  the  lines  of  other  Telegraph 
Companies — whereby  this  Company  has  been  relieved  from  bur 
dens  which  it  was  unable  to  bear — without  inconvenience  to  the 
Signal  Office,  and  without  depriving  the  public  of  the  valuable 
results  of  its  operations. 

I  have  the  honor  to  be,  very  respectfully, 

Your  obedient  servant, 

(Signed),  WILLIAM  ORTON, 

PRESIDENT. 


NOTE. — The  bills  of  the  Company  for  transmitting  the  "Weather  Reports  for  the 
ten  months  ending  July  31,  1872,  amounting  to  $102,391.51,  were  paid  October 
28th,  1872,  by  order  of  the  Honorable  Secretary  of  War. 


APPENDIX  D. 


REMONSTRANCE  OF  THE  WESTERN  UNION  TELEGRAPH  COMFY 

AGAINST  THE  POSTAL  TELEGRAPH  BILL, 

(Senate  Bill,   No.    341.) 

EXECUTIVE  OFFICE, 

WflStott  3Jtttta  Mfflrapft  (50., 

NEW  YORK,  February  13,  1872. 
To  the  Honorable, 

The  Senate  of  the  United  States. 

THE  WESTERN  UNION  TELEGRAPH  COMPANY  hereby  respectfully  re 
monstrates  against  the  passage  of  Senate  Bill  No.  341,  entitled,  "A 
Bill  to  Connect  the  Telegraph  with  the  Postal  Service,  and  to  Re 
duce  the  Rates  of  Correspondence  by  Telegraph,"  reported  by  the 
Senate  Committee  on  Post-offices  and  Post-roads  (Report  No.*  20), 
January  22d,  1872. 

The  following  are  some  of  the  objections  which  we  urge  to  the 
bill  : 

First. — Although  the  Report  truly  states  that  "  the  Western 
Union  Telegraph  Company  performs  nine  tenths  of  the  telegraph 
business,  and  fairly  represents  the  telegraph  system  of  the  country," 
this  Company  has  not  been  applied  to  by  your  Committee  for  any 
information  either  concerning  its  own  business  or  in  relation  to 
telegraphy  generally  ;  nor  has  it  been  offered  an  opportunity  to 
be  heard  upon  the  subject  before  the  Committee.  On  a  single 
occasion,  two  years  ago,  the  President  of  this  Company  was, 
on  his  own  application,  accorded  a  hearing  before  the  Committee, 
limited  to  fifteen  minutes. 

Under  these  circumstances  the  Managers  of  this  Company  have 
been  much  surprised  at  the  publication,  in  a  Senate  document,  of 
statements  concerning  this  Company,  which  are  erroneous  in  fact, 
or  in  the  inferences  to  be  established,  and  which  are  used  to  justify 
the  very  extraordinary  measures  embraced  in  this  bill. 

This  Company  is  not  prepared  to  admit  that  the  Senate  of  the 
United  States  is  the  proper  tribunal  before  which  to  try  the  corpo 
rations  created  by  the  States,  either  for  alleged  undue  expansion  of 
capital,  unreasonable  charges,  or  inadequate  facilities  ;  but  we 
claim  that,  whether  the  measure  reported  by  the  Committee  on 
Post-offices  and  Post-roads  is  based  upon  charges  against  this  Com 
pany,  or  upon  alleged  considerations  of  public  policy,  the  dictates 
of  justice  and  the  practice  of  the  Senate  alike  require  an  inquiry 
into  the  facts,  and  a  careful  investigation  of  the  interests  to  be 
effected,  before  adopting  legislation  so  important  in  its  conse 
quences.  Representing,  as  this  Company  does  in  a  large  degree, 


95 


the  telegraph  property,  the  telegraph  experience,  and  the  telegraph 
progress  of  the  country,  we  claim  that,  in  any  proposed  legislation 
affecting  telegraph  property  and  business  so  vitally  as  the  pro 
visions  of  this  bill,  we  are  entitled  to  a  hearing,  both  as  to  the  ne 
cessity  alleged  to  exist  for  Congressional  action,  and  the  effect 
of  such  action  upon  the  private  property  involved. 

We  protest  against  the  assumption  by  the  Committee  of  the 
Senate,  without  proof  and  without  having  been  heard  in  our 
defence,  that  the  business  of  the  Western  Union  Telegraph  Com 
pany  is  conducted  in  disregard  of  the  rights  of  the  public  to  such 
an  extent  as  to  render  it  necessary  for  Congress  to  intervene.  We 
are  not  advised  that  any  person  has  applied  to  the  Senate  for  the 
redress  of  any  grievance  alleged  against  this  Company.  Its  Man 
agers  are  believed  to  possess  the  confidence  of  the  public,  and  are 
earnestly  striving  to  meet  their  wants  by  extending  their  lines  into 
new  territory,  and  by  enlarging  telegraphic  facilities  as  rapidly  as 
the  growth  of  business  demands.  The  telegraphic  facilities  of  the 
United  States  have  been  increased  within  less  than  six  years  past 
by  the  construction  of  thirty  thousand  miles  of  line  and  seventy 
thousand  miles  of  wire,  and  the  opening  of  more  than  three  thou 
sand  new  stations.  Of  this  development  the  WESTERN  UNION  COM 
PANY  has  provided  more  than  half,  and  has  expended  therefor  about 
five  million  dollars,  in  addition  to  the  contributions  of  Railway 
Companies  included  in  its  system,  which  amount  to  two  and  a  half 
million  dollars  more.  Probably,  the  gross  expenditure  for  new 
telegraphic  property  by  all  the  companies  in  the  country,  including 
railways,  has  amounted  to  nearly  or  quite  twelve  millions  of  dollars 
within  these  six  years.  During  this  period  the  average  charge  for 
messages  has  been  reduced  one  half,  and  work  has  been  in  pro 
gress  for  some  time  by  this  Company  preparatory  to  further 
reductions,  which  will  be  made  at  an  early  day. 

There  have  been  paid  in  dividends  to  stockholders  in  telegraph 
companies,  during  the  period  of  this  development,  about  five 
millions  of  dollars,  or  an  average  of  less  than  one  million  a  year. 
This  would  be  ten  per  cent. — the  rate  contemplated  by  this  bill — 
on  a  capital  of  ten  millions,  which  is  less  than  the  sum  invested 
during  the  same  time  in  extending  and  improving  the  telegraph 
system,  which  previously  represented  more  lines  and  larger  reve 
nues  than  those  for  which  Great  Britain  recently  paid  more  than 
thirty  million  dollars  in  gold.  That  the  capital  invested  in  tele 
graphs  in  the  United  States  is  not  now,  and  has  not  of  late  been  re 
ceiving  adequate  compensation,  is  well  known  to  all  who  are 
acquainted  with  the  facts.  The  investment  has  been  made,  how 
ever,  in  the  confident  expectation  of  a  suitable  return  as  the  country 
progressed  in  population  and  wealth.  This  Company  has  con 
sidered  the  ordinary  risks  incident  to  competing  enterprises,  where 
success  depends  on  the  patronage  of  the  public,  but  they  have 
wholly  overlooked  the  possibility  of  danger  from  the  Government, 
or  of  an  attempt  by  Congress  either  to  take  their  property  or  inter 
fere  with  their  business  without  just  compensation,  or  to  create  a 
competing  Company,  and  then  to  confer  upon  that  company  the 


96 

right  of  exclusive  use  of  the  vast  facilities  provided  for  the  postal 
service  at  the  public  expense. 

Private  enterprise  has  already  established  the  telegraph  through 
out  every  State  in  the  Union,  and  in  all  the  Territories  but  one 
(Arizona).  The  value  of  the  services  it  has  rendered,  without 
charge,  in  the  interest  of  science,  and  to  sufferers  by  fire,  and  flood, 
and  pestilence,  is  far  beyond  that  of  all  the  pecuniary  contributions 
it  has  received.  Millions  of  acres  of  the  public  domain  have  been 
granted  to  railway  corporations,  while  the  telegraph  has  received 
no  grants  of  land  except  whereon  to  plant  its  poles. 

While  the  deficiency — nearly  $25,000,000 — in  the  revenues  of  the 
Post-office  Department  within  the  last  five  years  has  been  defrayed 
by  taxation  upon  the  people,  the  extensions  of  the  telegraph  within 
the  same  period  have  been  made  by  means  of  private  capital,  fur 
nished  by  private  citizens.  This  bill  attacks  the  results  of  this 
enterprise,  and,  if  it  becomes  a  law,  will  be  fatal  to  them. 

Second. — This  bill  creates  a  corporation  and  confers  upon  the 
corporators  special  privileges  and  extraordinary  powers.  Upon  what 
principle  and  for  what  reason  the  particular  persons  named  in  this 
bill  are  proposed  to  be  made  the  recipients  of  a  franchise  never  granted 
by  Congress  before,  and  of  immense  pecuniary  value,  in  the  event  that 
they  shall  be  enabled,  under  cover  of  its  provisions,  to  grasp  the  tele 
graph  property  of  the  corporations  created  by  the  States,  and  now  en 
gaged  in  the  business,  ive  are  not  informed.  They  are  authorized  to 
issue  one  million  dollars  of  its  stock  "  for  expenses  of  organization," 
and  as  there  is  nothing  in  the  bill  to  prevent  the  distribution  of  this 
stock  among  the  corporators,  we  assume  that  to  be  their  expecta 
tion.  The  bill  contains  no  provision  requiring  the  contribution  of 
any  money  as  the  basis  for  the  issue  of  such  stock.  This  stock  is 
entitled  to  receive  dividends  at  the  rate  of  ten  per  cent,  per  annum, 
so  that  Congress  is,  in  effect,  imposing  a  tax  of  one  hundred  thou 
sand  dollars  a  year,  to  be  levied  either  upon  the  Post-offices  or  the 
senders  of  messages,  to  give  a  bonus  to  the. beneficiaries  under  this 
bill,  as  an  inducement  to  engage  in  a  business  in  which  they  have 
now  no  investment,  and  in  the  conduct  of  which  they  have  had  no 
experience.  If  it  be  the  policy  of  the  Government  to  give  so  large  a 
bonus  to  encourage  investments  in  telegraphic  enterprises,  we  sub 
mit  that  justice  requires  that  companies  now  engaged  in  the  busi 
ness,  and  whose  property  is  at  hazard,  shall  at  least  be  permitted 
to  compete  for  the  gift. 

Third. — The  bill  provides  that  certain  expenses,  heretofore  borne 
by  telegraph  companies,  such  as  rent,  lights,  fuel,  messenger  and 
clerical  services,  and  also  for  stamps,  shall  hereafter  be  borne  by 
the  Post-office  Department — the  inference  being  that  the  necessary 
labor  can  be  performed  without  increasing  either  the  number  of 
officials  or  the  expenses  of  the  Department,  and  that  it  is  on  account 
of  the  saving  thus  effected  that  the  telegraphic  service  can  be  per 
formed  by  the  corporation  created  by  the  bill  at  rates  which  all 
past  experience  in  this  country  has  found  to  be  unprofitable.  The 
fact  that  this  illusive  feature  has  escaped  the  scrutiny  of  the  Com 
mittee  on  Post-offices  and  Post-roads  is  another  evidence  of  the  in- 


97 

justice  of  acting  on  the  bill  without  subjecting  its  provisions  to  the 
criticisms  of  interested  and  competent  experts.  The  bill  provides 
for  a  class  of  messages  (section  2)  termed  "registered  telegrams," 
"  which  shall  have  priority  of  transmission,"  and  on  which  double 
rates  may  be  charged.  On  examining  the  Report  of  the  Committee, 
to  ascertain  the  reason  for  conferring  a  privilege  of  such  immense 
value,  we  find  no  reference  made  on  the  subject. 

This  Company  remonstrate  against  a  scheme  which  gives  a  million 
dollars  to  create  a  new  monopoly,  under  the  pretence  of  checking 
an  existing  one,  and  which,  under  the  plea  of  effecting  "  a  greater 
reduction  of  rates  than  was  obtained  in  Great  Britain,"  covertly 
authorizes  putting  aside  the  ordinary  messages  of  the  public,  what 
ever  the  pressure  of  their  necessities,  and  giving  up  the  wires  to 
priority  messages  at  double  rates — the  effect  of  which  must  inevit 
ably  be  to  establish  the  priority  rates  for  messages  requiring  imme 
diate  despatch.  The  priority  rates  under  this  bill  are  higher  than 
the  present  average  rate. 

We  remonstrate  against  the  passage  of  a  bill  which  proposes  to 
hire  out  the  Government  Post-offices,  furnished,  and  warmed,  and 
lighted,  and  the  services  of  Government  employes  to  private  par 
ties,  unless  to  the  highest  and  most  responsible  bidder.  Especially 
do  we  protest  against  being  excluded  from  such  competition,  and 
being  put  on  the  defensive  by  those  whose  investments  in  the  busi 
ness  will  be  made,  if  made  at  all,  after  they  have  realized  from  the 
gratuities  which  the  bill  proposes  to  confer. 

Fourth. — The  bill,  in  effect,  exempts  the  property  and  business 
of  the  Company  which  it  creates  from  State  and  municipal  taxa 
tion.  It  also  makes  the  Company  the  agent  of  the  United  States  j 
so  that  the  public  would  be  as  completely  without  redress,  in  case 
of  neglect  to  forward  and  deliver  messages,  as  they  now  are  for  the 
loss  of  registered  letters  and  other  valuables  entrusted  to  the  mails; 
at  the  same  time  all  the  risks  of  defalcations  by  postmasters  and 
clerks,  of  theft  or  counterfeiting  of  stamps,  are  thrown  upon  the 
Post-office  Department. 

The  Western  Union  Telegraph  Company  does  not  desire  that  the 
Government  shall  purchase  their  property.  It  has  confidence  in 
the  future  growth  of  the  country  in  population,  commerce  and 
wealth.  In  the  benefits  of  that  growth  the  telegraph  must  largely 
participate.  It  relies  upon  the  future  for  a  just  return  for  the  great 
expenditure  it  has  already  made,  and  is  still  making,  to  enlarge  and 
improve  its  service.  If,  however,  this  Company  fails  to  meet  the 
just  expectations  of  the  public,  it  is  suggested  that  the  true  remedy 
is  to  require  the  surrender  of  its  property,  under  the  conditions  of 
the  law  of  1866.  But,  until  a  state  of  things  exists  which  makes 
interference  by  the  Government  necessary  for  the  protection  of 
public  interests,  this  Company  asks  to  be  permitted  to  control  and 
conduct  its  own  business  without  Congressional  intervention. 

We  remonstrate  against  the  passage  of  this  bill,  because  it  would 
depreciate  the  value  of  the  Company's  property  for  the  benefit  of 
private  parties.  It  cannot  be  that  Congress  would  enact  a  law, 
the  necessary  and  direct  effect  of  which  would  be  to  depreciate  the 

7 


value  of  private  property  which  they  have  the  right  to  purchase, 
with  a  view  to  diminish  the  compensation  to  be  paid  therefor. 

When  this  Company  accepted  the  provisions  of  the  Act  of  1866, 
it  was  upon  the  assumption  that  a  compact  was  thereby  entered 
into  between  the  Government  and  the  Company — (1)  that  we  were 
not  to  be  interfered  with  by  Congress  until  the  expiration  of  five 
years  ;  and  (2)  that  thereafter  we  were  only  to  be  liable  to  be 
dispossessed  of  our  property  at  a  valuation  to  be  fixed  by  arbitra 
tors  in  whose  appointment  we  should  have  an  equal  voice.  This 
Company  submits  to  the  Senate  whether  the  enactment  of  such  a 
law  as  that  reported  by  the  Committee  would  not  be  a  violation  of 
the  compact  into  which  we  entered,  relying  upon  the  good  faith  of 
Congress.  Under  that  compact  we  are  to-day  transmitting  mes 
sages  for  every  department  of  the  Government,  giving  them  pri 
ority  over  all  other  business,  at  rates  fixed  by  the  Postmaster- 
General,  which  do  not  pay  us  for  the  cost  of  the  service.  Is  it  . 
unreasonable  in  us  to  ask,  as  we  now  do,  either  that  the  compact 
be  performed  on  the  part  of  the  Government  or  that  this  Company 
be  released  from  its  obligations  ? 

Common  justice  requires  that  if  Congress  is  to  establish  a  com 
peting  enterprise,  in  which  the  Government  is  to  be  the  active  and 
only  responsible  partner,  it  shall  leave  this  Company  untrammelled 
by  the  restraints  of  a  compact  whose  reciprocal  conditions  it  wholly 
disregards. 

The  owners  of  telegraph  property  would  be  justified  in  petition 
ing  Congress  for  relief  from  many  of  the  burdens  it  is  obliged  to 
bear  ;  but  this  Company  asks  nothing  except  a  thorough  investi 
gation  of  the  subject,  at  which  they  shall  be  permitted  to  answer 
any  charges  affecting  their  administration,  and  that  they  be  allow 
ed  also  an  equitable  participation  in  whatever  privileges  are  of 
fered  by  Congress  with  a  view  to  making  cheaper  telegraphy 
possible. 

The  Western  Union  Telegraph  Company  relies  upon  Congress  to 
protect  their  property  from  a  scheme  which,  while  it  pretends  to 
promise  desirable  reforms,  and  provides  a  princely  bonus  ostensibly 
to  secure  them,  makes  no  provision  either  for  compensation  to  the 
owners  for  private  property  virtually  destroyed,  nor  for  securing 
to  the  public  any  benefits  promised  them.  We  are  unable  to  re 
gard  it  otherwise  than  as  a  scheme  to  enrich  its  promoters  at  the  ex 
pense  of  the  public  treasury,  and  of  the  private  interests  which  it 
seeks  to  supplant. 

WILLIAM  ORTON, 
HORACE  F.  CLARK, 
E.  D.  MORGAN, 
MOSES  TAYLOR, 
ALONZO  B.  CORNELL, 
AUGUSTUS  SCHELL, 

Committee  of  the  Board  of  Directors  of  the 
Western  Union  Telegraph  Company. 


PROCEEDINGS 


OF 


THE  COMMITTEE  ON  APPROPRIATIONS 


IN    THE    MATTER    OF 


THE   POSTAL  TELEGRAPH. 


POSTAL  TELEGRAPH. 


WASHINGTON,  D.  C.,  17th  Dec.,  1872. 

The  Committee  on  Appropriations  held  an  evening  session  in 
order  to  give  a  hearing  to  the  representatives  of  the  various 
Telegraph  Companies  of  the  country,  on  the  proposed  postal  tele 
graph  system.  The  following  proceedings  took  place : 

EEMAKKS  OF  MR  THUESTOK 

Mr.  THURSTON,  President  of  the  Pacific  and  Atlantic  Telegraph 
Company,  stated  that  under  the  Act  of  1866  his  Company  recog 
nized  its  obligation  to  sell  its  line  to  the  Government  at  what 
ever  price  might  be  fixed  by  the  arbitrators  provided  for  in  that 
law.  He  was  prepared  to  show  the  cost  of  the  line  to  the  Com 
pany — its  real  actual  cost,  with  unwatered  stock.  But  he  had 
not  come  before  the  Committee  to  make  any  statement  himself, 
but  rather  to  hear  what  other  gentlemen  bad  to  say.  He  was 
prepared,  however,  to  answer  any  questions  of  the  Committee. 
As  to  the  Hubbard  bill,  his  Company  had  great  objection  to  it, 
and  looked  upon  it  as  a  decided  wrong  for  the  Government  to 
create  a  monopoly  for  the  purpose  of  wiping  out  private  enter 
prise.  If  the  Government  itself  should  assume  the  telegraph 
business,  as  he  supposed  it  had  a  constitutional  and  legal  right 
to  do  under  the  Act  of  1866,  his  Company  had  nothing  to 
oppose  to  it.  But  the  Hubbard  bill  he  regarded  as  unjust  and 
unfair.  His  Company  was  perfectly  willing  for  the  Government 
to  use  its  lines  on  the  terms  of  the  Hubbard  bill,  and  would  be 
very  well  satisfied  to  be  guaranteed  six  per  cent,  on  its  capital 
instead  of  ten  per  cent.  The  proposition  in  the  Hubbard  bill 
that  the  Government  should  furnish  office  room,  stationery,  re 
ceiving  and  delivering  clerks,  messengers,  &c.,  would  save  half 
the  current  expenses  of  Telegraph  Companies.  The  rates  in  the 
Hubbard  bill  were  presumed  to  be  less  than  those  now  charged, 
and  under  which  his  Company  was  making  no  profits.  He  was 
sure  that  all  the  Telegraph  Companies  would  be  willing  to  assent 
to  the  terms  of  the  Hubbard  bill,  and  let  the  Postmaster  General 
fix  the  rates  for  messages  if  the  Government  would  guarantee 
them  10  per  cent,  on  their  capital.  His  own  Company  would 
be  well  satisfied  with  six  per  cent. 

Mr.  HALE. — You  would  adopt  the  same  rates  as  those  pro 
posed  in  the  Hubbard  bill,  and  ask  no  higher  guarantee  than 
6  per  cent.  ? 

Mr.  THURSTON. — We  would. 


102 

The  CHAIRMAN. — What  do  you  mean  when  you  speak  of 
6  per  cent,  on  your  capital  ? 

Mr.  THURSTON. — I  mean  six  per  cent  on  the  whole  cost  of 
our  line,  with  no  watered  stock. 

The  CHAIRMAN. — Please  state  to  the  Committee  the  extent 
of  your  lines,  and  what  was  their  cost. 

Mr.  THURSTON. — Our  lines  run  northwest  to  St.  Paul ;  south 
to  New  Orleans;  east  to  New  York,  Philadelphia  and  Balti 
more  ;  and  west  to  St.  Louis.  They  run  up  and  down  the  Mis 
sissippi  river  from  St.  Louis  to  St.  Paul,  branching  at  Dubuque 
to  Chicago,  and  extending  from  Chicago  to  Pittsburgh,  whence 
they  branch  to  the  three  principal  eastern  cities  that  I  have 
named.  They  also  extend  from  Pittsburg  to  Cincinnati,  and 
run  down  to  New  Orleans  by  way  of  Louisville,  Nashville  and 
Memphis.  In  round  numbers  we  have  5,000  miles  of  line 
and  about  10,000  miles  of  wire.  It  has  cost  us  $1,982,000,  and 
that  amount  of  stock  has  been  issued.  That  amount,  as  near  as 
I  can  figure  it,  is  as  small  a  sum  as  such  an  extent  of  line  can 
be  built  for.  Our  stock  has  been  all  sold  for  cash,  at  par  ;  and 
it  has  netted  us  that  sum,  less  commissions  and  expenses  in  plac 
ing  it.  Our  materials  were  all  bought  at  the  lowest  market 
price  for  cash.  The  labor  has  been  done  in  the  same  manner, 
and  the  line  has  cost  us  $1,982,000.  It  is  possible  that,  under 
other  circumstances,  a  line  might  be  built  for  less. 

The  CHAIRMAN. — When  was  your  line  built  ? 

Mr.  THURSTON. — Our  line  has  been  built  from  1866  up  to  the 
present  time. 

The  CHAIRMAN. — Is  it  costing  less  now  than  at  first? 

Mr.  THURSTON. — No,  sir ;  about  the  same.  Wire  is  much 
higher  now. 

The  CHAIRMAN. — What  rate  per  mile  does  it  cost  you  ? 

Mr.  THURSTON. — The  whole  5,000  miles  of  line  have  cost  us 
an  average  of  $400  a  mile,  or  $200  a  wire.  That  includes  all 
the  expenses.  It  includes  the  purchase  of  rights  of  way.  We 
paid  in  one  case  $165,000  for  one  right  of  way.  It  includes  all 
travelling  expenses  incident  to  procuring  rights  of  way,  and  all 
the  expenses  of  a  Company  in  existence  for  six  years,  during 
which  time  we  have  been  steadily  constructing  lines.  We  have 
not  been  building  any  for  the  last  year. 

The  CHAIRMAN. — How  was  it  that  you  had  to  buy  rights  of 
way  ?  Do  you  not  go  upon  lines  that  are  declared  post  routes 
by  Congress  ? 

Mr.  THURSTON. — Generally  we  do;  but  in  all  cases  we  had 
to  fight  our  way,  and  we  found  it  cheaper  to  purchase  certain 
privileges  from  railroad  companies  than  to  go  through  lawsuits. 
I  came  to  Washington  a  few  days  ago  for  the  purpose  of  con 
sulting  the  Attorney  General  on  the  rates  to  be  fixed  by  the 


103 

Government  for  the  transmission  of  its  messages.  He  claimed 
the  right  to  fix  those  prices  under  the  law  of  1866.  I  asked 
Mr.  Whiting,  who  represented  the  Attorney  General  at  the  time, 
if  the  Government  considered  that  law  a  contract.  He  said, 
"  Yes,  most  certainly,  it  was  accepted  on  the  part  of  your  Com 
pany."  I  said,  "  I  want  to  ask  you  one  question :  Does  the  Gov 
ernment  propose  to  carry  out  its  part  of  the  contract?"  He 
said,  "  Certainly."  I  said,  "  Well,  at  the  present  time,  our  hands 
being  tied,  we  are  at  great  expense  in  constructing  our  lines  from 
Memphis  to  New  Orleans,  our  right  of  way  being  contested  by 
the  New  Orleans  and  Jackson  Railroad  Company  on  their  road. 
They  have  sued  us,  cut  down  our  poles,  and  refused  to  carry 
our  materials,  and  have  charged  us  with  being  common  trespass 
ers.  I  wish  the  Government  of  the  United  States  then  to  carry 
out  its  part  of  the  contract  and  compel  that  Company  to  give  us 
right  of  way  and  proper  transportation  under  that  Act."  He  de 
clined  to  do  it,  or  to  express  any  opinion  on  the  subject.  I  men 
tion  this  to  show  that  that  is  all  the  benefit  we  have  derived 
under  the  Act  of  1866,  whereas,  on  the  other  hand,  we  have 
been  doing  the  signal  service  business  for  a  long  time  at  rates 
that  are  absolutely  a  loss  to  us  of  one  half.  We  found  it  cheaper 
to  buy  rights  of  way. 

Mr.  HALE. — You  say  that  you  have  not  been  extending  your 
lines  for  the  last  year.  W  hy  is  that  ? 

Mr.  THURSTON. — On  a  very  simple  principle  of  good  busi 
ness.  We  have  no  money,  and  we  never  run  in  debt. 

Mr.  HALE. — You  extended  your  line  to  the  point  that  you 
found  it  profitable  to  do  so  ? 

Mr.  THURSTON. — No,  sir.  We  could  extend  our  line  further 
and  make  it  profitable.  The  fact  is,  a  telegraph  line  must  reach 
out  continually  into  new  territory  if  it  is  to  continue  to  do  busi 
ness.  You  cannot  run  a  telegraph  line  with  any  profit  upon 
isolated  roads.  You  must  have  it  so  as  to  accommodate  all 
customers.  The  business  of  a  telegraph  line  is  somewhat  like 
the  business  of  a  large  grocery  or  dry  goods  house  ;  it  has  its 
regular  customers.  A  very  small  amount  of  its  business  is 
derived  from  transient  customers.  Its  principal  business  is 
from  regular  customers — men  with  whom  we  have  to  keep  an 
account,  and  to  whom  we  render  bills  at  the  end  of  the  month. 
The  transient  business,  the  mere  message  of  the  man  who  may 
come  in  to-day  to  send  a  message,  and  whom  we  may  not  see 
again  for  a  month,  amounts  to  nothing.  Therefore,  it  is  neces 
sary  for  us  to  have  as  large  a  connection  as  possible  with  the 
business  centres  of  the  country.  This  line  of  ours  was  con 
structed  on  that  principle.  We  reach  all  the  direct  centres  of 
trade  with  as  little  expense  as  possible.  It  was  got  up  at  the 
close  of  1865  with  a  view  of  making  a  competing  line  with  the 


104: 

Western  Union  Telegraph  Company,  which  was  at  that  time  a 
monopoly.  The  stock  of  our  line  was  taken  principally  by 
merchants,  not  so  much  for  profit  as  for  the  purpose  of  getting 
up  cheap  telegraphing.  The  stock  has  not  been  on  the  market. 

Mr.  HALE. — You  do  not  propose  now  to  extend  your  lines 
further,  but  have  arrived  at  about  the  extent  you  desire  ? 

Mr.  THURSTON. — If  this  question  of  Governmental  telegraph 
ing  was  not  pending  we  should  probably  extend  our  lines  much 
further — that  is,  we  should  fill  in  the  territory  better. 

Mr.  PALMER. — You  spoke  of  the  signal  service  business.  Are 
you  doing  any  portion  of  it  now? 

Mr.  THURSTON. — Yes,  a  large  portion  of  it. 

Mr.  PALMER. — At  what  rates? 

Mr.  THURSTON. — We  are  getting  a  rate  of  three  cents  per 
word  on  a  given  circuit,  as  designated  by  the  signal  officers, 
which  circuit  is  in  contradistinction  to  the  circuit  as  designated 
by  the  Postmaster  General. 

Mr.  PALMER. — Can  you  tell  what  the  average  length  of  a  cir 
cuit  is  ? 

Mr.  THURSTON. — No,  sir ;  it  varies  very  much. 

Mr.  PALMER. — It  is  the  same,  substantially,  as  it  has  been  for 
a  year  or  two  ? 

Mr.  THURSTON. — No,  sir ;  one  circuit  is  from  Cincinnati  to 
New  Orleans,  for  which  we  get  thirty  cents  a  message  from  the 
signal  service,  and  for  which  we  charge  the  public  $1.50  per 
message,  and  do  not  make  money  at  that. 

The  CHAIRMAN. — Please  state  to  the  Committee  the  amount 
of  real  estate,  offices  and  the  like,  held  by  your  Company.  You 
have  stated  the  cost  of  the  line,  and  I  suppose  that  includes 
real  estate  ? 

Mr.  THURSTON. — I  meant  the  cost  of  the  line  and  equipment. 
We  own  no  real  estate. 

The  CHAIRMAN. — Did  you  include  the  offices  in  your  state 
ment? 

Mr.  THURSTON. — I  include  the  equipment  of  the  offices.  We 
rent  the  offices. 

The  CHAIRMAN.— Your  statement  of  about  $2,000,000  in 
round  numbers  is  the  total  cost  of  all  that  you  own  as  a  Com 
pany  ? 

Mr.  THURSTON. — Yes. 

The  CHAIRMAN. — What  is  the  average  number  of  wires  along 
your  lines? 

Mr.  THURSTON. — From  New  York  to  Philadelphia  we  have 
five  wires  ;  from  Philadelphia  to  Pittsburg  we  have  three  wires  ; 
from  Baltimore  to  Pittsburg,  two  ;  from  Pittsburg  to  Cincin 
nati,  three ;  from  Cincinnati  to  Chicago,  two ;  from  Cincinnati 
to  New  Orleans,  two  ;  fronrSt.  Louis  to  St.  Paul,  two ;  from  St. 


105 

Louis,  by  way  of  Terre  Haute  to  a  point  on  the  Chicago  line, 
two.  It  is  a  two  wire  line  with  the  exception  of  about  150 
miles. 

Mr.  HALE/ — How  do  your  rates  compare  with  the  rates  of  the 
Western  Union  Telegraph  Company  between  the  same  places? 

Mr.  THURSTON. — They  are  the  same  at  present. 

Mr.  HALE. — How  long  has  that  been  the  case? 

Mr.  THURSTON. — Since  the  first  of  May. 

Mr.  HALE. — How  were  they  before  ? 

Mr.  THURSTON. — They  were  the  same  between  the  same 
places. 

Mr.  HALE. — Why  did  you  say  since  the  first  of  May  ? 

Mr.  THURSTON. — Because  up  to  that  time  they  were  not  pre 
cisely  the  same.  There  was  a  little  variation  in  the  rates  up  to 
the  first  of  May.  At  that  time  there  was  an  advance  of  rates. 
Previously  to  that  the  rates  varied  now  and  then. 

Mr.  HALE. — Since  the  first  of  May  your  Company  and  the 
Western  Union  Company  have  had  the  same  rates  ? 

Mr.  THURSTON. — Yes,  sir.  The  rates  that  we  have  now  are 
the  rates  which  the  Company  which  I  represent  established  when 
we  first  commenced  business  ;  they  are  about  half  the  rates 
which  the  Western  Union  Company  charged  before  then.  Afier 
our  line  was  of  sufficient  length  that  they  found  it  able  to  inter 
fere  with  their  business,  they  reduced  the  rates  which  we  had 
established  fully  one  half.  That  competition  went  on  for  three 
years,  and,  of  course,  no  money  was  made  by  the  Companies.  It 
was  a  losing  business.  By  an  agreement  between  the  two  Com 
panies  the  rates  were  advanced  on  the  first  of  May  last ;  but  we 
only  agreed  to  put  them  back  to  the  point  at  which  we  first 
started. 

The  CHAIRMAN. — Are  your  rates  the  same  now  ? 

Mr.  THURSTON. — Yes. 

The  CHAIRMAN. — Is  there  any  other  relation  between  the  two 
Companies  besides  the  one  you  have  mentioned — such  as  owner 
ship  ? 

Mr.  THURSTON. — ISTo,  sir. 

The  CHAIRMAN. — No  combination  in  work  ? 

Mr.  THURSTON.— No,  sir. 

The  CHAIRMAN. — Are  you  in  combination  with  any  other 
telegraph  line  ? 

Mr.  THURSTON. — No  further  than  the  mere  interchange  of 
messages.  Messages  are  interchanged  between  us  and  the 
Franklin  Company,  the  Atlantic  and  Pacific  Company,  and  the 
Great  Western  Company.  We  simply  exchange  messages  one 
with  the  other,  when  we  take  them  for  points  in  one  another's 
line.  There  is  no  combination  existing,  in  the  full  sense  of  the 
word. 


106 

Mr.  NIBLACK. — What  is  the  proper  name  of  your  Company  ? 

Mr.  THURSTON. — The  Pacific  and  Atlantic  Telegraph  Com 
pany. 

The  CHAIRMAN. — Has  the  question  ever  been  raised  in  your 
Company  as  to  the  right  of  the  United  States  under  the  Act  of 
1866  ?  Have  you  ever  contested  it  with  the  Government  or 
denied  it  in  any  way  ? 

Mr.  THURSTON. — No,  sir.  We  do  not  pretend  to  contest  it  or 
deny  it  under  our  acceptance  of  that  Act. 

The  CHAIRMAN. — Have  you  ever  refused  to  send  any  message 
for  the  Government  ? 

Mr.  THURSTON. — No,  sir.  "We  have  protested  against  the 
compensation,  and  my  protest  is  now  on  file  in  the  signal  offices, 
showing  distinctly  that  we  are  doing  the  work  at  one  half  its 
cost  to  the  Company.  I  propose  at  the  proper  time  to  make  ap 
plication  to  the  proper  authorities  for  recompense  for  the  money 
that  we  have  lost  in  doing  the  service  for  the  Government.  I 
stated  the  matter  very  fully  in  my  protest  on  file  in  the  signal 
office. 

The  CHAIRMAN.— When  ? 

Mr.  THURSTON. — Some  time  last  summer. 

The  CHAIRMAN. — Does  the  mode  adopted  by  the  signal  offices 
of  sending  its  messages  interfere  with  your  business  any  more 
than  any  other  ordinary  form  of  messages  ? 

Mr.  THURSTON. — Yes. 

The  CHAIRMAN. — In  what  way  ? 

Mr.  THURSTON. — We  have  certain  hours  at  which  signal  mes 
sages  are  supposed  to  be  handed  us,  at  which  time  we  are 
expected  to  transmit  them  without  delay,  giving  them  preference 
over  all  other  business.  Until  those  messages  are  handed  in  we 
cannot  fully  handle  our  wires,  nor  undertake  to  send  long  mes 
sages,  because  we  would  have  to  interrupt  them  when  the 
signal  messages  come  in.  The  result  is  that  the  wires  lie  com 
paratively  idle,  waiting  for  the  signal  messages.  Of  course  there 
are  a  few  messages  sent  in  the  meantime  in  regard  to  handling 
the  wires,  or  such  office  business  as  is  needed  ;  but  effectually 
and  practically  the  wires  are  at  the  service  of  the  United  Slates 
for  one  hour's  time.  When  that  hour  expires  the  orders  are  to 
go  on  with  the  regular  business  of  the  office ;  but  during  that 
hour's  time  the  wires  are  kept  virtually  at  the  service  of  the 
signal  office. 

The  CHAIRMAN. — Is  the  peculiar  arrangement  of  circuits  and 
dropping  messages  a  matter  of  disadvantage  to  you  ? 

Mr.  THURSTON. — Yes,  sir. 

The  CHAIRMAN. — In  what  way  ? 

Mr.  THURSTON. — The  circuits  are  purely  arbitrary  and  are  not 
circuits  of  the  Company.  The  signal  service  makes  our  circuit 


107 

for  us  from  New  Orleans  to  Cincinnati  whether  our  Superin 
tendent  makes  it  so  or  not,  and  we  must  send  its  messages  over 
all  the  circuit ;  then  the  messages  have  to  be  dropped,  and  for 
these  drops  we  get  no  compensation.  For  instance,  we  send  a 
regular  commercial  message  from  Cincinnati  to  New  Orleans, 
and  we  receive  for  it  $1.50 ;  the  signal  service  sends  its  mes 
sages  between  the  same  points,  and  we  receive  for  it  only  30 
cents — but  that  message  is  also  dropped  at  Louisville,  Nash 
ville  and  Memphis.  There  are  one,  two,  three,  four  messages 
delivered  for  30  cent?.  But  the  signal  service  says  :  "  No,  this 
14  goes  the  whole  length  of  the  wire ;  it  is  heard  at  each  office  as 
"  it  passes  through  ;  it  goes  through  those  offices  anyway,  and 
"  the  dropping  of  it  is  no  extra  expense  to  the  Company."  If 
that  message,  which  goes  from  Cincinnati  to  New  Orleans  was 
sent  primarily  from  Cincinnati  to  Louisville,  it  would  be  a  mes 
sage,  and  would  be  paid  for  at  the  rate  of  30  cents  ;  the  man 
ipulation  in  sending  it  from  Cincinnati  would  be  the  same,  and 
the  labor  of  receiving  it  at  Louisville  would  be  precisely  the 
same.  But  the  signal  service  says  that  it  is  no  trouble  to  have 
the  message  dropped  at  Louisville,  and  yet  the  operator  has  to 
be  on  hand  there,  and  has  to  go  through  the  same  manipulations 
in  receiving  that  dropped  message  as  if  it  had  been  sent  pri 
marily,  and  only  from  Cincinnati  to  Louisville.  The  result  is 
that  a  signal  service  message  sent  from  Cincinnati  to  New 
Orleans  employs  four  offices,  and  requires  the  same  services  to  be 
performed  as  four  commercial  'messages  would  require,  and 
yet  the  signal  service  pays  for  only  one  message,  and  pays  for 
that  only  20  per  cent,  of  that  which  a  commercial  message  would 
pay. 

The  CHAIRMAN. — The  operators  would  be  at  the  intermediate 
offices  anyhow,  would  they  not  ? 

Mr.  THURSTON. — They  might  not  be.  It  is  not  likely  that 
some  of  them  would  be  at  their  offices  at  12  o'clock  at  night. 
It  would  not  be  necessary. 

The  CHAIRMAN. — What  do  you  estimate  the  present  value  of 
your  lines  at  ? 

Mr.  THURSTON. — We  estimate  their  present  value  commer 
cially.  We  have  gone  through  six  years'  hard  work,  toil  and 
struggle,  getting  up  our  line,  disposing  of  our  stock,  acquiring 
facilities,  and  sustaining  the  establishment  of  our  line  against  the 
Western  Union  Telegraph  Company,  which  attempted  to  crush 
us  out.  Our  stockholders  have  been  without  any  income  all 
this  time;  they  have  established  a  business  at  a  loss,  or  at  the  loss 
of  interest  on  capital,  and  they  look  to  it,  the  same  as  any  other 
business  man  would,  to  repay  them  in  the  future.  When  a  busi 
ness  has  been  established — a  rolling  mill,  a  foundry,  or  a  manu 
factory — the  value  of  it  is  not  precisely  what  its  owner  has  paid 


108 

for  it  in  dollars  or  cents,  but  what  it  is  worth  to  him  as  a  future 
means  of  subsistence  and  profit.  Therefore,  when  we  estimate 
what  our  lines  are  worth,  we  do  not  estimate  them  at  what 
they  may  have  cost  us,  but  as  to  what  they  are  worth 
in  the  future  as  a  means  of  earning  money  for  the  stock 
holders — what  they  would  be  worth  to  sell  to  anybody  else  to 
morrow.  A  man  who  had  spent  some  time  in  establishing  a 
large  manufactory  might  say,  "  This  only  cost  me  $100,000,  but 
really  it  is  worth  $200,000,  and  I  do  not  want  to  sell  it  for  less." 
That  is  the  view  we  take.  While  we  only  spent  $2,000,000  on 
our  line,  and  spent  it  very  niggardly  and  very  economically,  we 
do  not  feel  disposed  to  dispose  of  our  property  at  an  undervalua 
tion.  We  consider  our  line  worth  $3,000,000. 

Mr.  HALE. — Is  your  stock  in  the  market? 

Mr.  THURSTON. — No,  sir  ;  it  is  not  in  the  general  market. 

The  CHAIRMAN. — What  would  you  say  is  the  cost  to  your 
Company  per  word  for  doing  associated  press  work  ? 

Mr.  THURSTON. — I  am  not  prepared  to  answer  that  question 
at  present. 

The  CHAIRMAN. — Is  it  your  opinion  that  you  are  doing  that 
work  for  less  than  cost  ? 

Mr.  THURSTON. — I  do  not  presume  we  are. 

The  CHAIRMAN. — You  have  stated  that  you  are  doing  the 
work  of  the  signal  service  at  less  than  cost. 

Mr.  THURSTON. — Yes,  and  I  am  prepared  to  show  it  very 
clearly  from  my  letters  on  file  at  the  signal  omce. 

The  CHAIRMAN. — How  does  the  rate  which  the  signal  service 
pays  you  compare  with  the  rate  which  the  associated  press  pays 
you? 

Mr.  THURSTON. — I  cannot  compare  the  rates,  because  we  send 
the  associated  press  reports  in  a  different  manner  and  in  a 
different  form.  We  send  a  great  deal  of  specials.  Our  asso 
ciated  press  business  is  not  like  the  associated  press  business 
of  the  Western  Union  Company. 

The  CHAIRMAN. — What  are  those  rates  ?  I  suppose  your 
rates  were  on  the  same  basis  as  the  Western  Union  Company. 
.  Mr.  THURSTON. — Yery  nearly  on  the  same  basis.  The  un 
derstanding  between  the  Western  Union  Telegraph  Company 
and  ourselves  is,  that  neither  Company  shall  make  a  change  of 
rates  without  the  concurrence  of  the  other  Company — that  is,  in 
regard  to  our  regular  business ;  but  in  regard  to  these  press 
rates  we  may  change  them  as  we  see  proper. 

The  CHAIRMAN. — Can  you  remember  readily  what  those  rates 
are? 

Mr.  THURSTON. — Not  readily.  A  short  time  ago — a  week  or 
so  since — a  proposition  was  before  me  for  sending  despatches 
from  Washington  City  to  Cincinnati,  and,  I  think,  Chicago,  and 


109 

4J-  and  5  cents  a  word  was  the  price  to  be  paid.  That  was  for 
specials. 

The  CHAIRMAN. — How  many  drops  were  included  in  that  ? 

Mr.  THURSTON. — One  at  Pittsburg  and  one  at  Cincinnati. 

The  CHAIRMAN. — If  you  can  furnish  us  a  statement  on  those 
points  as  to  the  rates  charger!  the  associated  press  by  your 
Company — the  rate  per  word,  the  distance  sent,  and  the  number 
of  duplicates  or  drops — we  should  be  very  glad  you  would  do  so, 
the  object  being  to  ascertain  and  make  a  fair  comparison  between 
press  work  and  signal  service  work. 

Mr.  THURSTON. — I  am  going  back  to  Pittsburg  to-morrow 
and  will  transmit  the  information  in  a  letter. 

Mr.  PALMER. — What  press  associations  do  you  work  for  ? 

Mr.  THURSTON. — We  transmit  for  the  American  Press 
Association. 

Mr.  PALMER. — Where  does  it  collect  its  news? 

Mr.  THURSTON. — In  New  York  City,  arid  Cincinnati  and 
Chicago. 

Mr.  PALMER. — Where  does  it  make  its  headquarters? 

Mr.  THURSTON. — The  president  of  it  resides  in  Philadelphia. 

REMARKS  OF  MR.  BROWN. 

Mr.  JAMES  W.  BROWN,  President  of  the  Franklin  Telegraph 
Company,  stated  that  the  managers  and  stockholders  of  that 
Company  regarded  the  Hubbard  bill  with  great  disfavor.  They 
thought  that  some  of  its  provisions  were  striking  at  the  very 
life  of  the  Franklin  Telegraph  Company.  That  Company  was 
organized  about  six  years  ago.  During  that  six  years  it  had 
been  running  in  sharp  competition  with  the  Western  Union 
Telegraph  Company,  over  what  he  believed  was  well  known  as 
"the  worst  burned  district"  in  the  United  States.  In  other 
words,  the  tariff  had  been  lower  in  proportion  to  the  length  of 
wires  than  in  any  other  part  of  the  country.  For  six  or  seven 
years  they  had  been  losing,  or  at  least,  not  making  any  money, 
and  had  accumulated  quite  a  debt.  Last  year  was  the  first 
year  that  the  Franklin  Telegraph  Company  had  managed  to 
make  any  profit.  Last  year  the  Company  had  saved  from  its 
earnings  about  $2,000,  and  this  year  it  expected  to  save  a  much 
larger  sum.  Now  that  it  appeared  that  there  was  the  slightest 
probability  of  Congress  passing  the  Hubbard  bill,  the  Company 
felt  very  much  concerned  about  it.  The  Company  felt  that  the 
profitable  business  which  it  had  been  doing  last  year  and  this 
year  was  not  so  much  owing  to  its  present  management  as  it 
was  owing  to  its  increase  of  business  through  its  extension  of 
wires  and  opening  of  new  lines,  which  had  become  feeders  to 
the  Franklin  line.  The  Franklin  Company  had  gradually 


110 

built  up  its  business,  and  it  now  felt  a  great  deal  of  concern  in 
seeing  that  any  steps  were  being  taken  to  destroy  its  business. 
It  felt  that  it  had  been  gradually  educating  the  public  up  to  the 
telegraph  business,  and  that,  if  the  Hubbard  bill  should  pass, 
the  Company  was  going  to  lose  its  reward.  He,  therefore,  came 
here  in  the  name  of  the  Franklin  Telegraph  Company's  stock 
holders,  to  protest,  if  he  could  use  the  word,  against  any  corpo 
ration  being  organized  to  enter  into  competition  with  existing 
Telegraph  Companies  under  the  very  favorable  terms  proposed 
in  the  Hubbard  bill.  On  looking  over  that  bill  he  discovered 
that  the  tariff  rates  would  not  be  materially  reduced  from  those 
which  the  Franklin  Telegraph  Company  was  now  charging. 
For  instance,  the  rate  between  New  York  and  Boston  would  be 
twenty-five  cents  under  the  Hubbard  bill,  and  the  Franklin 
Telegraph  Company  was  now  charging  only  thirty  cents.  That 
was  a  circuit  of  250  miles.  For  two  circuits  of  500  miles  the 
rate  under  the  Hubbard  bill  would  be  forty  cents,  and  the 
Franklin  Telegraph  Company  was  doing  that  service — from 
Boston  to  Washington — for  fifty  cents ;  therefore,  there  was 
not  much  difference  between  the  rates,  while,  on  the  other  hand, 
the  Company  to  be  organized  under  the  Hubbard  bill  was  to  be 
furnished  by  the  Government  with  office  room,  stationery, 
clerks  and  messengers,  and  was  to  import  its  material  free  of 
duty — and  for  all  those  advantages  it  would  only  pay  to  the 
United  States  the  sum  of  five  cents  on  every  telegram  trans 
mitted.  It  cost  the  Franklin  Telegraph  Company  over  six  cents 
a  message  for  delivering  its  messages  in  Boston  and  New  York, 
where,  owing  to  the  large  amount  of  business  done,  the  work 
was  done  cheaper  than  at  smaller  stations ;  so  that,  if  the  Gov 
ernment  should  only  receive  five  cents  on  each  message  deliv 
ered,  it  would  be  giving  a  bonus  to  the  Company. 

Mr.  PALMER. — What  do  you  mean  when  you  speak  of  deliv 
ering  and  receiving  clerks  ? 

Mr.  BROWN. — When  a  message  comes  in  to  the  counter  there 
is  a  man  there  to  receive  it,  who  is  called  the  receiving  clerk. 
That  message  has  to  be  taken  and  numbered,  and,  after  it  is 
numbered,  it  goes  to  the  operator.  That  is  what  we  call  receiv 
ing  messages.  When  a  message  is  to  be  delivered  it  is  sent 
from  the  operator  to  a  clerk,  and  passes  through  two  or  three 
hands  before  it  reaches  the  message  boy,  who  receives  two  cents 
for  delivering  it.  The  delivery  only  costs  us  six  cents  in  the 
average ;  while,  for  the  five  cents  which  the  Government  is  to 
receive  under  the  Hubbard  bill  on  each  message,  the  Govern 
ment  is  not  only  to  deliver  but  to  receive  the  message,  to  fur 
nish  the  office  with  fuel  and  stationery,  and  to  make  the 
telegraph  property  free  of  tax.  These  bills  must  be  paid  by 
some  one,  and  must,  of  course,  fall  on  the  Government.  Our 


Ill 

people  feel  that  if  such  advantages  are  to  be  given  to  any  cor 
poration,  those  corporations  which  have  educated  the  public  up 
to  the  present  point,  and  which  have  labored  as  they  have  done, 
should  have  them  in  preference  to  a  Company  which  has  not  yet 
got  a  mile  of  wire  or  a  telegraph  office.  Our  Company  is  of 
opinion  that  if  its  property  is  to  pass  out  of  its  hands  it  shall  not 
pass  into  the  hands  of  any  new  Company  on  the  basis  of  an  ap 
praisement  by  four  or  five  men,  but  that  if  the  Government  is 
going  to  interest  itself  in  telegraphing,  it  should  go  into  it  as  a 
business  on  its  own  account.  If  the  business  is  to  be  done  by 
the  people  at  all,  it  should  be  done  by  the  people  thoroughly, 
and  for  the  people,  and  by  the  agents  of  the  people. 

The  CHAIRMAN. — What  would  your  Company  say  if  it  was 
offered  the  privileges  of  this  bill  ? 

Mr.  BROWN. — I  think  our  people  would  accept  it  and  be  glad 
to  do  so. 

The  CHAIRMAN. — You  think  you  would  make  as  much  money 
under  it  as  you  do  now? 

Mr.  BROWN. — That  is  a  subject  to  which  I  have  not  given 
much  thought,  but  I  think  we  could.  My  idea  is  that  if  a  man 
has  a  telegraph  message  to  send,  and  can  send  it  for  five  cents 
cheaper  from  the  Post-office  than  he  can  send  it  from  an  office 
next  door,  he  will  send  it  to  the  Post-office  rather  than  send  it 
next  door  and  pay  five  cents  more.  But  if  our  line  alone  had  this 
position,  of  course  the  competing  companies  would  immediately 
place  their  tariff  on  the  same  basis,  and  then  the  difficulty  woulcl 
come  up  again. 

The  CHAIRMAN. — Has  your  Company  done  any  work  for  the 
Government? 

Mr.  BROWN. — Yes,  sir  ;  we  do  a  good  deal  of  department  work 
and  a  part  of  the  signal  service  business. 

The  CHAIRMAN. — What  is  your  experience  as  to  the  signal 
service  business? 

Mr.  BROWN. — We  have  tried  to  do  our  best.  We  believe 
that  the  business  has  been  done  satisfactorily  to  the  signal  office, 
and  it  has  been  entirely  satisfactory  to  us. 

The  CHAIRMAN. — You  receive  what  you  think  is  a  reasonable 
compensation  for  the  work? 

Mr.  BROWN. — Yes,  sir ;  we  are  satisfied.  We  are  in  "  the 
burned  district,"  where  we  are  accustomed  to  low  rates. 

The  CHAIRMAN. — Has  any  question  ever  been  raised  by  your 
Company  as  to  its  obligation  to  perform  work  for  the  Govern 
ment? 

Mr.  BROWN. — I  think  the  matter  may  have  been  spoken  of. 
When  we  accepted  the  Act  of  1866  we  did  it  with  a  full  under 
standing  of  what  we  were  about,  and  we  were  entirely  satisBed 
to  take  upon  ourselves  such  burdens  as  the  United  States  might 
impose. 


112 

The  CHAIRMAN. — You  regarded  the  franchises  which  the 
Government  gave  you  under  that  Act  as  pretty  valuable  to  your 
Company  ? 

Mr.  BROWN. — So  far  we  have  not  had  occasion  to  find  them 
of  much  value. 

The  CHAIRMAN. — Would  you  be  glad  to  be  relieved  from  the 
obligations  of  that  Act? 

Mr.  BROWN. — No,  sir;  we  do  not  care  anything  about  them. 

The  CHAIRMAN. — You  prefer  to  hold  to  its  benefits  and  bear 
its  burdens? 

Mr.  BROWN. — We  do  not  complain  of  any  burdens. 

The  CHAIRMAN. — What  does  your  Company  say  to  the  plan 
of  the  Postmaster  General  for  the  postal  telegraph  ? 

Mr.  BROWN. — The  idea  of  some  of  our  leading  men  is,  that 
if  the  Government  chooses  to  go  into  this  business  we  have  no 
objection.  We  hold  our  telegraph  property  the  same  as  we 
might  hold  ten  bales  of  cotton ;  if  we  get  what  we  think  a  fair 
equivalent  for  it  the  Government  can  have  it. 

The  CHAIRMAN. — What  do  you  think  would  be  a  fair  price 
for  your  property  ? 

Mr.  BROWN.— I  think  about  $500,000. 

The  CHAIRMAN. — What  is  the  basis  of  your  estimate  ? 

Mr.  BROWN. — The  cost  of  our  property. 

Mr.  PALMER. — How  many  miles  of'  line  have  you  ? 

Mr.  BROWN. — We  have  two  routes  from  Boston  to  New  York — 
two  distinct  routes — and  we  have  one  route  from  New  York  to 
Washington.  That,  of  course,  you  see,  doubles  the  distances 
from  New  York  to  Boston.  We  have  six  wires  between  Boston 
and  New  York,  seven  between  New  York  and  Philadelphia, 
and  four  between  Philadelphia  and  Washington. 

Mr.  PALMER. — How  many  miles  of  wire  in  all  ? 

Mr.  BROWN.— 3,000. 

Mr.  PALMER. — What  is  the  length  of  the  signal  service  cir 
cuits  on  your  line? 

Mr.  BROWN. — That  I  cannot  answer.  I  am  not  sufficiently 
familiar  with  the  subject.  I  do  not  know  the  length  of  circuits 
on  other  lines. 

Mr.  HALE. — When  you  say  you  have  3,000  miles  of  wire 
you  count  your  duplicates  and  triplicates,  you  do  not  mean  3,000 
miles  of  route? 

Mr.  BROWN. — Oh,  no  ;  of  wire. 

Mr.  HALE. — How  many  miles  of  route  have  you  ? 

Mr.  BROWN. — 750  miles,  in  round  numbers ;  from  Boston  to 
New  York  two  routes,  and  from  Washington  to  New  York  one 
r^ute. 

Mr.  HALE. — How  do  your  rates  compare  with  the  Western 
Union  Company's  rates  for  private  despatches  ? 


113 

Mr.  BROWN. — They  are  always  the  same.  I  believe  that  is 
the  rule  all  over  the  country.  Wherever  the  Western  Union 
lines  run  our  rates  are  always  the  same. 

Mr.  HALE. — You  are  not  extending  your  lines? 

Mr.  BROWN. — We  are  not  extending  our  route.  We  are  oc 
casionally  putting  on  new  wires.  We  put  on  two  wires  between 
New  York  and  Philadelphia  last  spring  to  accommodate  our 
business. 

Mr.  HALE  (to  Mr.  Thurston). — Did  you  mean  5,000  miles  of 
route  or  5,000  miles  of  wire  as  the  extension  of  your  line  ? 

Mr.  THURSTON. — 5,000  miles  of  route  and  10,000  miles  of 
wire. 

Mr.  BROWN. — In  the  matter  of  rates  it  is  perhaps  well  under 
stood  that  no  sooner  does  one  Company  drop  its  rates  than  the 
other  Company  immediately  conforms  to  them,  otherwise  it 
would  soon  lose  its  business.  Therefore,  whenever  the  Western 
Union  Company  lowers  its  rates  it  is  immediately  followed  by 
the  opposition  Company. 

EEMAEKS  OF  MR.  SWEET. 

Mr.  E.  D.  L.  SWEET,  executive  manager  of  the  Atlantic  and 
Pacific  Telegraph  Company,  stated  that  the  executive  officers  of 
the  Atlantic  and  Pacific  Telegraph  Company  and  its  stockhold 
ers  were,  so  far  as  expression  had  been  given,  of  the  opinion 
that  the  telegraph  business  of  the  country  can  be  satisfactorily 
done  by  companies  operating  under  private  corporations,  and 
that  while  the  Atlantic  and  Pacific  Telegraph  Company  might 
be  glad  to  avail  itself  of  such  legislation  as  would  enable  Tele 
graph  Companies  to  do  business  at  less  than  present  rates,  it  is 
opposed  to  the  plans  now  under  consideration  by  that  Committee, 
and  desires  permission  to  state  its  objections  more  at  length  in 
writing. 

The  CHAIRMAN. — Are  the  signal  service  circuits  long  on  your 
line? 

Mr.  SWEET. — Yes,  sir ;  we  have  no  signal  service  circuit  that 
is  less  than  1,200  miles  long.  The  shortest  we  have  is  between 
New  York  and  Milwaukee,  which  is  (the  way  the  line  runs) 
over  1,200  miles. 

Mr.  HALE. — How  many  miles  of  route  has  your  Company  ? 

Mr.  SWEET. — Our  line  runs  from  New  York  to  San  Fran 
cisco.  That  is  substantially  the  route,  but  it  is  done  in  some 
parts  by  connections.  We  own  7,000  miles  of  wire  and,  I 
think,  about  2,600  miles  of  route,  extending  from  New  York 
to  Saratoga,  and  Albany  and  Syracuse,  and  there  dividing  into 
two  routes,  one  by  way  of  Oswego,  and  one  by  way  of 
Auburn  to  Clyde.  That  is  one  route.  From  Buffalo  there  are 


114 

two  routes  to  Chicago  by  way  of  Detroit  and  Sandusky,  extend 
ing  down  to  Cincinnati,  then  across  the  State  of  Iowa  and  to 
Ogden.  That  is  the  extent  of  the  line  that  we  own.  At  Ogden 
we  connect,  by  contract,  with  the  Central  Pacific  Telegraph 
Company,  and  their  lines  are  known  as  the  Central  Pacific  Di 
vision  of  our  Company,  but  they  are  not  included  in  the  state 
ment  made  to  the  Postmaster  General  as  to  the  extent  of  our 
wires. 

The  CHAIRMAN. — Have  you  given  the  Postmaster  General 
the  estimated  cost  of  your  lines  ? 

Mr.  SWEET. — No,  sir ;  nor  am  I  prepared  to  give  it  to-night, 

The  CHAIRMAN. — Please  to  put  it  in  your  written  statement. 

Mr.  SWEET. — I  will  submit  the  matter  to  our  Executive  Com 
mittee. 

The  CHAIRMAN. — You  will  also  please  to  state  your  rates  for 
messages. 

Mr.  SWEET. — Our  rates  are  the  same  as  those  of  the  Western 
Union  Telegraph  Company,  and  always  have  been  so. 

The  CHAIRMAN. — Please  say  to  your  Company  that  the  com 
mittee  would  be  glad  to  know  the  cost  of  your  line,  and  such 
other  facts  as  you  have  heard  given  here  to-night  by  the  repre 
sentatives  of  other  telegraph  companies. 

Mr.  SWEET. — I  shall  do  so.  My  reason  for  coming  here  to 
night  was,  that  I  might  make  a  memorandum  of  all  the  points 
of  inquiry. 

The  CHAIRMAN. — I  would  like  to  say  to  all  the  gentlemen 
who  have  been  heard  to  night,  that  the  committee  may  find  it 
necessary  to  propound  some  inquiries  not  yet  made.  If  so,  we 
will  notify  them  by  letter. 

Mr.  ORTON,  President  of  the  Western  Union  Telegraph  Com 
pany,  said: 

As  I  was  unable  to  be  present  when  the  hearing  commenced 
this  evening,  I  am  only  informed,  by  what  I  have  heard  during 
the  last  ten  minutes,  as  to  the  course  of  the  proceedings  to  night, 
and  I  therefore  rise  to  inquire  whether  the  committee  desire  to 
examine  the  representatives  of  the  Western  Union  Company  on 
the  subject  now  under  consideration. 

The  CHAIRMAN. — The  simple  facts  of  the  case  are :  that,  by 
resolution  of  the  House,  of  December  4th,  so  much  of  the  Presi 
dent's  Message  and  of  the  Keport  of  the  Postmaster  General  as 
relates  to  the  subject  of  the  postal  telegraph  was  referred  to  this 
committee.  By  a  similar  resolution  last  year  the  same  subject 
was  also  referred  to  this  committee ;  and  under  that  resolution 
at  last  session  some  progress  was  made  in  a  general  inquiry,  first 
about  the  relations  of  the  Telegraph  Companies  to  the  signal  ser 
vice,  and  second,  upon  the  general  question  of  a  bill  known  as 


115 

the  Hubbard  bill.  That  bill  is  still  in  the  hands  of  this  com 
mittee,  as  it  has  been  presented  and  modified ;  and  additional 
facts  and  suggestions  and  recommendations  of  the  President 
and  of  the  Postmaster  General  have  also  come  to  the  commit 
tee  ;  and  on  the  whole  subject  the  committee  has  desired  to 
know  whether  any  of  those  Telegraph  Companies  have  anything 
new  to  offer. 

Mr.  NiBLACK. — Permit  me  to  state  my  view  of  the  question. 
By  the  message  of  the  President,  calling  attention  to  the  Report 
of  the  Postmaster  General,  we  are  asked  to  take  measures  to 
wards  establishing  a  postal  telegraph  operated  by  the  Govern 
ment.  From  another  source  the  Hubbard  bill  is  urged  upon 
us.  Others  again  have  appeared  before  us  at  different  times 
and  urged  that  Congress  should  not  interfere  with  the  subject 
at  all.  These  three  views  of  the  case  are  now  before  us  for  our 
consideration. 

The  CHAIRMAN. — Precisely. 

Mr.  NIBLACK, — These,  I  suppose,  are  the  points  to  which  we 
desire  gentlemen  to  direct  their  attention. 

The  CHAIRMAN. — In  addition  to  what  has  been  so  well  stated 
by  Mr.  Niblack,  this  committee  desires  to  represent  the  aspira 
tions  of  the  American  people  on  this  subject,  as  far  as  it  knows 
what  they  are,  and  also  to  secure  to  the  Government  whatever 
is  just  and  right.  The  telegraph  public  is  now  represented  in 
this  room.  The  question  is,  shall  the  Government  do  nothing? 
shall  it  take  the  lines  and  carry  on  the  business  itself?  or  shall  it 
allow  a  third  party,  as  suggested  in  the  Hubbard  bill,  to  do  the 
business  ?  These  are  the  questions  we  have  to  pass  upon. 

Mr.  NIBLACK. — We  have  heard  more  on  the  subject  of  the 
Hubbard  plan  than  on  any  other. 

Mr.  PALMER. — As  I  understand  it  the  several  presidents  of 
the  telegraph  lines  have  sent  requests  to  be  heard  ;  and,  so  far  as 
I  am  concerned,  I  am  perfectly  willing  that  they  shall  speak  in 
their  own  way  on  the  subject. 

The  CHAIRMAN.— Certainly.  The  meeting  is  called  for  the 
sake  of  hearing  what  the  Telegraph  Companies  have  to  say  on 
this  whole  subject,  and  we  have  this  evening  heard  from  all  but 
the  Western  Union  Telegraph  Company.  The  field  is  your 
own,  Mr.  Orton. 

REMARKS  OF  MR.   ORTON. 

Mr.  ORTON. — I  regret,  Mr.  Chairman,  that,  owing  to  the 
fatigues  of  the  journey  here,  and  to  a  day  and  night  of  extraor 
dinary  work  before  leaving  New  York,  I  am  in  no  condition  at 
this  time  to  do  justice  to  the  subject ;  but  with  the  permission  of 
the  committee  I  will  submit  a  few  suggestions  which  occur  to  me 


116 

on  reading  the  report  of  the  Postmaster  General,  which  I  hold  in 
my  hand. 

I  believe  that  the  Western  Union  Telegraph  Company  is  the 
only  Company  mentioned  by  the  Postmaster  General  in  his 
report,  although  reference  is  made  incidentally  to  other  com 
panies  ;  and,  as  I  conceive  that  the  allusions  to  the  "Western 
Union  Company  are  not  entirely  just,  and  do  not  repre 
sent  the  facts,  either  so  far  as  they  concern  that  Company  or 
so  far  as  they  relate  to  the  telegraph  business  generally  in  this 
country  or  in  Europe,  I  desire  to  occupy  a  little  time  in  the  con 
sideration  of  this  report. 

The  first  point  to  which  I  will  invite  the  attention  of  the  com 
mittee  is  the  reference  of  the  Postmaster  General  to  the  rates 
established  in  1871  for  signal  service  messages;  and  I  will  say 
at  the  outset  that  I  have  no  desire  to  enter  on  a  re-discussion  of 
the  question.  But,  in  order  that  this  brief  review  of  the  report 
may  touch  all  the  topics,  I  will  merely  say  in  this  connection 
that  the  Postmaster  General  has  misunderstood  the  position  of 
the  Western  Union  Telegraph  Company  concerning  the  signal 
service  business.  He  says ;  "  The  Western  Union  Company 
"  contended,  first,  that  the  signal  service  messages,  which,  to  be 
"  effective,  require  simultaneous  transmission  through  special 
"  circuits  at  certain  times,  were  not  covered  by  the  second  sec- 
"  tion  of  the  Act  approved  July  24th,  1866." 

When  I  had  the  honor  to  appear  before  the  committee  at  the 
last  session  of  Congress  I  endeavored  to  explain  that  the  Com 
pany  with  which  I  am  connected  claimed  no  right  to  scrutinize 
the  messages  of  any  person  representing  himself  to  be  an  agent 
or  officer  of  the  United  States,  and  that  the  objection  which  we 
made  to  the  claim  of  the  Postmaster  General  in  that  regard  was, 
that,  after  having  exercised  the  authority  which  the  law  ex 
pressly  confers  upon  him  to  fix  the  rates  on  Government  mes 
sages,  we  understood  that  he  claimed  something  more — namely : 
to  direct  by  what  route  a  message  should  be  transmitted  from 
the  initial  to  the  terminal  station,  and  what  intermediate  stations 
on  that  route  should  be  included  in  it ;  and  also  at  what  hours 
of  the  day  the  offices  of  the  Company  should  be  open  for  the  re 
ception  of  such  messages,  in  order  that  a  continuous  circuit 
might  be  made  up  to  be  worked  synchronously  across  the  con 
tinent,  including  the  intermediate  stations,  and  the  messages 
transmitted  over  that  circuit,  and  dropped  at  the  intermediate 
stations  and  delivered  at  the  terminal  stations  simultaneously. 
We  claimed  that  the  Act  of  1866  did  not  confer  such  authority 
on  the  Posmaster  General.  We  claimed,  furthermore,  that  the 
rates  to  be  fixed  by  that  officer  under  the  law  of  1866  are  uni 
form  rates ;  that,  having  fixed  a  rate  on  Government  business  of 
one  cent  per  word  on  each  circuit  of  250  miles  (under  which, 


117 

for  illustration,  the  tariff  on  a  Government  message  from  Wash 
ington  to  Chicago,  being  four  circuits,  would  be  four  cents 
a  word),  it  was  not  competent  for  him  to  say  that  another  class 
of  Government  business  between  Washington  and  Chicago,  sent 
by  a  more  circuitous  route,  and  involving  more  labor  on  the 
part  of  the  Company,  should  be  sent  for  three  cents  a  word  ;  and 
yet  this  difference  was  involved  in  the  claim  of  the  Postmaster 
General.  For  example :  under  the  general  order,  a  message 
from  the  Secretary  of  War  to  General  Sheridan,  whose  head 
quarters  are  at  Chicago,  delivered  to  us  here,  entitled  to  priority, 
but  transmitted  within  the  discretion  of  the  Company  by  what 
ever  routes  ajid  wires  would  best  perform  the  service,  pays  four 
cents  a  word?  We  are  entitled  to  receive  four  cents  a  word  for 
that ;  but  under  the  order  concerning  the  signal  service  business 
it  became  necessary  to  send  the  message  by  way  of  New  York, 
including  in  the  circuit  a  large  number  of  stations  which  are  not 
in  it'  as  ordinarily  worked  with  Chicago  ;  and  for  that  ser 
vice  the  rate  fixed  was  three  cents  a  word.  Now,  we  submit 
very  respectfully,  Mr.  Chairman,  that  the  law  which  authorizes 
the  Postmaster  General  to  fix  rates,  necessarily  and  inevitably  re 
quires  the  fixing  of  a  uniform  rate  for  the  like  service,  and  that 
a  message  from  Washington  to  Chicago  must  have  a  uniform 
price  for  it ;  that  if  the  Government  requires  a  message  to  be 
transmitted  between  Washington  and  Chicago  in  an  unusual 
manner,  in  order  that  other  service  than  that  which  is  usual  in 
connection  with  the  message  may  be  performed  in  connection 
therewith,  for  such  extraordinary  service  we  claim  that  ex 
traordinary  compensation  is  due.  This  is  briefly  the  view  of 
The  Western  Union  Telegraph  Company  on  that  point. 

The  report  of  the  Postmaster  General  speaks  of  the  liberality 
of  Congress  towards  the  telegraph  as  follows  : 

"  When  through  the  liberality  of  Congress  the  first  telegraph 
"  line  had  been  constructed,  and  the  partial  success  of  the  in  veil- 
"  tion  demonstrated. " 

I  do  not  desire  to  detract  in  the  smallest  degree  from  whatever 
merit  is  due  to  Congress  on  account  of  its  liberality  toward  the 
telegraph ;  but  it  seems  proper  to  call  the  attention  of  the 
committee  to  the  fact,  that  $30,000  was  contributed  to  enable 
Professor  Morse  to  make  an  experiment  with  the  telegraph,  and 
that>the  line  which  was  built  with  that  appropriation,  after  hav 
ing  been  operated  for  a  time  by  the  Government,  was  found  to 
be  an  expense — that  it  was  not  self-sustaining,  and  the  Govern 
ment  gave  it  away  simply  to  stop  that  expense.  That 
appropriation  is  the  only  one  that  I  remember  to  have  been 
made  by  Congress  for  the  benefit  of  the  telegraphs  of  the  United 
States,  with  the  single  exception  of  that  made  in  1861,  when 
Congress  authorized  a  contract  to  be  made  with  any  party  who 


118 


would  give  adequate  security  to  construct  and  maintain  a  tele 
graph  line  between  the  Missouri  Eiver  and  the  Pacific  Ocean, 
the  free  use  of  which  should  be  given  to  the  United  States  for 
10  years,  in  consideration  of  $40,000  a  year.  Such  a  contract 
was  made,  the  line  was  constructed,  and  has  been  in  operation 
ever  since.  The  contract  price  promised  by  the  United  States 
has  been  fully  paid  and  the  contract  has  expired  ;  but  I  claim 
that  the  Government  simply  paid  for  service  which  was  richly 
worth  the  cost.  But,  if  it  was  not,  there  is  one  other  fact  in  that 
connection  which  is  entitled  to  mention.  Since  1862  the  tele 
graph  has  paid  into  the  Federal  Treasury  over  a  million  and  a 
half  of  dollars  for  taxes.  :  %  ' 

Mr.  NIBLACK. — Do  you  mean  all  the  Companies,  or  your 
Company  only? 

Mr.  ORTON. — I  mean  all  the  Companies,  since  the  internal 
revenue  laws  went  into  operation,  which  was  in  1862.  There 
fore,  if  we  consider  that  the  $40,000  a  year  was  a  contribution 
by  the  United  States  for  which  it  received  no  equivalent,  still, 
while  it  was  paying  that  out  with  one  hand  with  the  other  it 
was  taking  in  three  times  as  much. 

The  telegraph,  therefore,  it  is  but  fair  to  say,  stands  before  the 
people  of  the  United  States  as  the  product  of  private  enterprise, 
and  is  not  the  debtor  of  the  Government  for  a  single  dollar. 
Congress  has  given  hundreds  of  millions  for  other  enterprises — 
hundreds  of  millions  in  bonds  and  lands  to  railways,  and,  so  far 
as  I  know,  not  a  single  Telegraph  Company  in  the  United  States 
is  to-day  the  recipient,  directly  or  indirectly,  of  one  single  dollar 
of  benefit  conferred  by  the  Federal  Government.  We  make 
no  complaint  of  that.  It  has  been  a  favorite  investment 
with  but  few  people.  It  has  paid  less  during  the  last  six  years, 
while  I  have  been  actively  connected  with  it,  to  the  owners  of 
the  property,  on  whatever  basis  the  estimate  is  made,  than  any 
other  active  public  investment  in  the  United  States.  Whether 
the  estimate  be  made  on  the  basis  of  the  cost  of  the  lines,  on  the 
market  value  of  the  stock,  or  on  any  other  basis — the  telegraph 
business  in  the  United  States  during  the  last  six  years  has  paid 
less  on  the  average  than  investments  in  other  corporations. 

Keference  is  made,  in  the  Postmaster  General's  report,  to  a 
possible  rivalry  between  the  business  of  the  post-office  and  the 
telegraph  in  this  country.  Without  reading  from  the  report  of 
the  Postmaster  General,  and  certainly  without  desiring  to  do  him 
any  injustice,  I  think  I  am  justified  in  saying  that  his  report 
contemplates  a  state  of  things  under  which  the  telegraph  might 
become  the  competitor  of  the  mails,  and  the  revenues  of  the 
post-office  might  suffer  from  such  competition.  That  is  the  in 
ference  which  I  draw  from  certain  general  statements  in  the 
report.  Now,  I  can  only  express  an  opinion  on  that  point,  and 


119 

I  shall  not  undertake  to  refer  to  statistics  in  support  of  it ;  but 
it  is  my  opinion  that  the  telegraph  contributes  far  more  to  the 
development  of  the  postal  service  than  it  draws  from  it  as  a  re 
sult  of  its  competition.  That  is  to  say,  between  any  two  cities 
of  the  United  States  the  increase  in  the  correspondence  by  mail 
will  be  in  a  larger  ratio  than  the  increase  in  the  correspondence 
by  telegraph,  whatever  that  increase  may  be.  While  I  shall 
not  undertake  to  support  the  opinion  by  data,  I  will  state,  as  the 
result  of  my  investigation  of  the  subject,  that  the  telegraph,  in 
stead  of  being  the  rival  of  the  postal  service — a  something  which 
is  going  to  interfere  with  it  or  detract,  from  its  revenues — is  a 
constant  stimulant  to  increase  the  correspondence  by  mail,  and 
therefore  to  increase  the  postal  revenues.  Let  me  remark,  in  this 
connection,  that  notwithstanding  the  fact  that  the  wires  of  the 
Western  Union  Telegraph  Company  are  absolutely  idle  for  at 
least  six  hours  in  the  twenty -four,  we  probably  pay  a  very  much 
larger  sum  for  postage  every  year  than  any  other  private  cor 
poration  in  the  United  States.  With  our  offices,  and  wires,  and 
men,  and  all  the  necessary  appliances  for  conducting  the  busi 
ness,  without  apparently  any  increase  of  cost,  we  still  pay  large 
sums  annually  for  postage,  simply  because  there  is  a  department 
of  correspondence  which  it  is  impossible  for  the  telegraph  to 
do.  For  example  :  It  cannot  audit  its  own  accounts.  I  do  not 
mean  to  say  that  it  is  physically  impossible  to  do  so  by  tele 
graph,  but  that  the  expense  of  doing  it  with  accuracy  would  be 
vastly  greater  than  it  is  to  do  it  by  mail. 

Mr.  NIBLACK. — You  mean  in  the  transaction  of  official  busi 
ness  between  the  offices  ? 

Mr.  OKTOK — Yes,  sir.  It  is  very  difficult  for  the  telegraph 
to  be  accurate  in  the  transmission  of  figures.  I  read  again  from 
the  report : 

"  The  natural  policy  of  private  Companies  is  to  extend  facili- 
"  ties  slowly,  and  only  to  profitable  points  ;  to  let  their  business 
"  augment  gradually,  and  to  reap  larger  profits  from  a  small 
"  number  of  messages,  while  a  Government  system,  managed  in 
"  the  interests  of  the  people,  pursues  exactly  the  opposite 
"  course." 

I  suppose  that  it  is  entirely  correct  to  say  that  it  is  the  natural 
policy  of  men  engaged  in  every  department  of  business  so  to 
conduct  it  as  to  make  the  largest  legitimate  profit.  The  tele 
graph,  however,  has  not  been  behind  the  development  of  the 
country  in  population,  in  scarcely  any  section.  It  has  kept 
pace  with  the  railways  all  over  the  country,  and  there  are  hun 
dreds,  if  not  thousands  of  miles  of  telegraph  in  operation  to-day 
where  there  are  no  railways,  and  where,  I  think,  the  mails  only 
run  two  or  three  times  a  week.  The  telegraph  is  being  rapidly 
developed  in  Northern  Texas,  the  Indian  Territory,  Kansas, 


120 

Colorado,  Montana,  California,  Northern  Michigan,  and  other 
sections  of  the  country,  where  I  think  the  mails  are  not  run 
every  day.  It  is  not  too  much  to  say  that  the  telegraph 
has  fairly  kept  pace  with  the  growth  of  the  country  ;  but, 
if  it  has  not,  I  still  am  of  opinion  that  it  would  be^  unjust 
to  charge  it  with  any  special  selfishness.  Investments  are  made 
in  telegraph  property  for  the  sole  purpose  of  making  profit. 
"We  make  no  pretense  to  being  a  philanthropic  or  benevolent 
institution.  We  only  claim  that,  having  received  no  benefits 
from  Congress  other  than  that  general  protection  of  the  laws 
to  which  all  citizens  are  entitled,  we  are  not  liable  to  any  special 
charges,  even  if  we  do  not  keep  up  with  the  general  expectation 
in  the  provision  of  facilities.  I  quote  again : 

"Meanwhile,  the  immediate  defects  and  abuses  of  the  tele- 
44  graph  call  loudly  for  reform." 

If  there  is  anybody,  Mr.  Chairman,  who  alleges  before 
this  committee,  or  before  Congress,  or  before  any  department  of 
the  Government,  abuses  concerning  the  conduct  of  its  business 
by  the  Company  with  which  I  am  connected,  I  shall  esteem  it  a 
favor  to  be  informed  of  the  fact.  But  I  submit,  unless  al 
legations  are  made,  which,  not  being  denied,  do  call  for  reform, 
whether  it  is  just  for  the  head  of  an  executive  department  of 
the  Government  to  charge  citizens  engaged  in  a  lawful  enter 
prise,  by  the  investment  of  their  own  capital,  with  "  defects  and 
abuses,"  without  supporting  that  charge  by  something  which, 
undenied,  would  be  acccepted  as  evidence  of  the  fact. 

I  do  not  admit  that  the  question  of  the  value  of  telegraph 
property  is,  under  present  circumstances,  an  entirely  proper  sub 
ject  for  consideration  by  this  committee,  and  for  this  reason : 
Under  the  law  of  1866  the  Federal  Government  has  the 
right  to  purchase  all  the  lines  and  property  of  the  Companies 
which  have  accepted  the  provisions  of  that  Act,  at  an  appraised 
value,  to  be  ascertained  by  five  competent  disinterested  persons, 
two  of  whom  shall  be  selected  by  the  Postmaster  General  of  the 
United  States,  two  by  the  Company  intereste.1,  and  one  by  the 
four  so  previously  selected.  Now,  while  the  general  question  of 
what  it  might  cost  the  United  States  to  acquire  all  the  telegraph 
lines  may  be  a  proper  subject  for  consideration,  I  conceive 
that  anything  which  looks  like  anticipating  the  award  of  that 
jury,  in  the  selection  of  which  the  Companies  have  an  equal 
voice,  is  unfair ;  and  I  therefore  except  to  that  portion  of  the  re-, 
port  of  the  Postmaster  General  which  discusses  this  question  of 
the  value  of  the  telegraph  lines  of  the  United  States. 

I  desire  to  have  the  attention  of  the  committee  especially  to 
what  I  am  about  to  read.  The  report  states  as  follows : 

u  The  majority  of  lines  in  this  country  have  been  built  very 
"  cheaply,  their  entire  cost,  including  patents,  being  probably 


121 

"  much  less  than  $10,000,000.  In  fact,  the  poles  have  been 
"  erected  in  many  cases  entirely  without  cost  to  the  Telegraph 
"  Companies  by  the  railroads  along  whose  tracks  they  are  built." 
*  *  *  (I  fail  to  see  how  that  affects  the  question  of  their  value.) 

"  The  cost  of  a  new  system,  equal  in  extent  to  the  present, 
"  would,  at  the  above  rates,  be  $11,880,000." 

Now,  I  submit  whether  these  general  charges  of  defects  of 
administration,  this  prejudicing  of  the  condition  of  the  property, 
and  this  fixing  of  its  value,  is  a  fair  proceeding  on  the  part  of 
an  executive  officer  of  the  United  States  towards  Companies 
whose  obligation  to  part  with  their  property  is  coupled  with 
their  right  to  be  represented  on  the  jurv  that  is  to  settle  the 
question  of  its  value.  No  reason  for  the  opinions  here  expressed, 
and  to  which  I  have  just  referred,  is  given  in  the  report — no 
satisfactory  reason — but  I  find  in  the  appendix  a  detailed  esti 
mate  by  Mr.  Charles  T.  Chester,  of  New  York ;  and  I  would  be 
glad  to  know  whether  the  statement  which  I  have  just  quoted 
from  the  report  as  to  the  probable  cost  of  duplicating  the  pre 
sent  telegraph  system  of  the  United  States,  is  based  upon  this 
estimate,  on  page  169  of  the  Postmaster  General's  report.  Has 
the  committee  any  information  on  that  subject? 

THE  CHAIRMAN. — I  presume  the  committee  has  no  informa 
tion  on  that  subject.  The  Chairman  has  not.  Perhaps  the 
Postmaster  General  may. 

The  POSTMASTER  GENERAL. — That  result  is  gathered  in  part 
from  that  report  of  Chester's,  in  part  from  other  information,  and 
also  in  part  from  the  reports  of  Mr.  Orton  himself.  It  is  not 
confined  to  Mr.  Chester's  statement  or  to  any  other  statement. 

Mr.  ORTON. — If  my  reports  have  been  as  widely  misapprehend 
ed  as  the  report  of  Mr.  Chester  has  been,  I  can  begin  to  compre 
hend  how  such  a  statement  as  that  came  to  be  made.  The  com 
mittee  will  pardon  me  for  calling  attention  again  to  the  fact  that 
there  are  two  statements  made  in  the  report :  first,  that  all  the 
telegraph  property  in  the  United  States  probably  cost  "  much 
fess"  than  $10,000,000  ;  and  secondly,  that  it  can  be  reproduced 
for  $11,880,000.  The  only  witness  whom  the  Postmaster 
General  brings  forward  to  support  this  statement  is  Mr.  Charles 
T.  Chester,  of  New  York,  whose  estimate  is  found  on  page  169 
of  the  report.  The  principal  item  in  that  estimate  is  175,000 
miles  of  wire,  and  you  will  note  particularly  that  it  says  "  duty 
free"  Now,  the  duty  on  telegraph  wire  is  over  60  per  cent.; 
and  more  than  half  of  the  20,000  miles  of  wire  which  the  West 
ern  Union  Company  erected  in  the  year  1872  it  was  obliged  to 
import,  and  to  pay  thereon  duty  at  the  rate  of  about  68  per  cent., 
less  10  per  cent,  since  the  1st  of  July  last,  I  think.  In  this  esti 
mate,  then,  this  principal  item,  representing  more  than  $6,000,000, 
is  for  wire  duty  free.  Now,  the  committee  will  bear  in  mind 


• 


122 

that  this  is  the  witness  who,  presumptively,  is  put  upon  the  stand, 
if  not  to  prove  the  statement  of  the  Postmaster  General,  at  least 
to  justify  its  being  made  ;  and  I  know  it  will  surprise  the  com 
mittee,  as  it  surprised  me,  on  examining  Mr.  Chester's  estimate 
in  detail,  and  on  footing  it  up  (notwithstanding  that  its  principal 
item,  representing  more  than  $6,000,000,  is  for  wire  duty  free)  to 
find  that  the  total  is  eighteen  and  one  quarter  millions  of  dollars. 
Let  me  repeat :  The  Postmaster  General  alleges  that  all  the  tele 
graph  property  in  the  United  States  cost  less  than  $10,000,000, 
and  that  it  can  be  all  reproduced  for  $11,880,000,  and  he  puts 
upon  the  stand  a  witness  whose  estimate  takes  $6,000,000 
worth  of  wire  at  60  per  cent,  less  than  it  costs,  and  that  wit 
ness  testifies  that  it  would  cost  eighteen  and  one  quarter  mil' 
lions  of  dollars  I 

Mr.  HALE. — He  says  it  can  be  put  up  for  about  25  per  cent, 
below  that  estimate. 

Mr.  ORTON. — Would  not  that  25  per  cent,  be  fully  offset  by  the 
60  per  cent,  on  the  wire?  That  is  what  the  rest  of  us  would 
have  to  pay. 

Now,  Mr.  Chairman,  I  propose  to  inquire  concerning  the  com 
petency  of  Mr.  Charles  T.  Chester  to  be  a  Government  witness 
in  this  trial,  on  an  indictment  by  the  Postmaster  General,  of  the 
Telegraph  Companies  of  the  United  States  for  not  having  spent 
more  of  their  own  money  in  the  development  of  a  businesss 
that  has  brought  less  average  return  than  any  other  public  in 
vestment  in  the  country  within  the  last  six  years. 

"Was  there  no  one  actively  connected  with  the  telegraph  busi 
ness;  no  unprejudiced  person  in  the  United  States,  having  know 
ledge  of  the  facts;  of  whom  inquiry  might  have  been  made  and 
whose  testimony  would  have  been  entitled  to  weight  ? 

Mr.  Charles  T.  Chester  never  constructed  but  one  telegraph 
line,  and  that  was  built  in  the  City  of  New  York  within  the  last 
three  years.  It  is  the  Fire  Alarm  Telegraph  of  that  city.  And 
we  have  had  the  curiosity  to  investigate  Mr.  Charles  T.  Chester's 
Fire  Alarm  Telegraph,  and  have  obtained  from  the  Fire  Depart 
ment  an  inventory  of  the  property  which  he  put  into  it,  and  from 
the  Comptroller  of  the  City  the  bill  which  he  presented  to  the 
city  for  it. 

He  erected  625  miles  of  wire,  and  his  bill  for  it,  on  file  to-day 
in  the  office  of  the  Comptroller  of  the  City  of  New  York,  is 
$850,000.  Now,  at  the  rate  that  Mr.  Charles  T.  Chester,  who 
offers  to  build  a  line  (which  the  Postmaster  General  says  can  be 
built  for  $11, 880,000)  for  eighteen  and  a  quarter  million  dollars, 
if  you  will  let  him  import  his  wire  free  of  duty — at  the  rate 
which  Mr.  Charles  T.  Chester  charges  the  City  of  New  York, 
the  telegraph  lines  in  the  United  States  would  amount  to  $238,- 
000,000 !  There  were  eighty  miles  of  poles.  If  we  make  the 


123 

calculation  on  the  basis  of  the  miles  of  poles  the  result  would 
be  nearly  '$800,000,000 !  -  But  if  his  bill  for  $850,000  were  to 
be  audited  on  the  basis  of  his  estimate  of  eighteen  and  a  quarter 
millions,  for  a  system  of  telegraph  equal  to  that  now  in  opera 
tion  in  the  United  States,  the  Comptroller  would  pay  him  but 
$65,000! 

Mr.  SARGENT. — Is  there  not  some  difference  in  the  number  of 
instruments  and  their  character,  between  the  Fire  Alarm  Tele 
graph  and  the  ordinary  business  telegraph,  which  would  account 
for  some  difference  in  the  cost  ? 

Mr.  ORTON. — Yes,  sir ;  I  think  there  is.  As  a  general  thing 
it  costs  very  much  less  in  proportion  to  equip  that  sort  of  tele 
graph  than  it  does  to  equip  a  regular  telegraph  for  commercial 
business. 

Perhaps,  Mr.  Chairman,  as  a  specimen  brick,  this  is  a  little 
better,  clearer,  and  more  decided  a  specimen  than  we  shall  be 
able  to  produce  as  we  go  through  with  the  other  estimates  and 
exhibits  in  this  report,  and  yet,  without  a  single  exception,  on 
analyzing  them,  the  result  will  be  substantially  the  same. 

But  I  acquit  the  Postmaster  General  of  an  intention  to  do 
the  telegraph  business  of  the  United  States  so  great  an  injustice 
as  he  has  undoubtedly  done  it.  This  is  not  his  work. 
The  young  gentleman  who  has  been  permitted  to  use  the 
dignity  of  a  high  officer  to  shield  himself  while  making  an  assault 
on  private  citizens  and  on  private  enterprises  is  the  same  who 
appeared  before  this  committee  at  the  last  session  of  Congress 
as  the  volunteer  advocate  of  the  Government  side  of  this 
question. 

I  say  I  acquit  the  Postmaster  Greneral  of  an  intention  to  do  so 
great  an  injustice  as  has  been  done,  not  only  to  the  Companies, 
but,  as  I  submit  very  respectfully,  to  himself  and  to  his  great 
office.  But  I  do  ask  that,  in  the  further  consideration  of  this 
question,  by  whatever  department  of  the  Government,  some 
regard  be  paid  to  the  fact :  that  there  are  connected  with  the 
telegraph  business  in  the  United  States  gentlemen  who  have 
been  engaged  in  it  almost  since  its  commencement ;  gentlemen 
of  ripe  experience,  of  high  character,  and  whose  opinions  and 
whose  statements  of  fact  are  certainly  entitled  to  as  much 
weight  as  the  guesses  of  this  clerk,  who  has  been  permitted  in  an 
official  document  to  assail  private  citizens  and  private  enter 
prises  in  the  name  of  the  Postmaster  General. 

Let  me  say  a  word  on  the  question  of  value.  The  telegraph 
and  railroad  companies  in  the  United  States  have  invested, 
during  the  last  six  years,  more  cash  in  the  production  of  telegraph 
property  than  the  gross  sum  named  in  the  Postmaster 
General's  report  as  the  cost  of  all  the  lines  in  the  country. 

The  CHAIRMAN. — Do  you  mean  by  that  that  more  cash  capital 
has  been  invested  in  the  actual  structure  ? 


124 

Mr.  ORTON. — Yes,  sir. 

The  CHAIRMAN. — You  exclude  stock  operations  ? 

Mr.  ORTON. — I  exclude  stock  operations.  I  mean  exactly 
what  I  say  :  More  cash  has  been  invested  in  the  production  of 
telegraph  property — not  stock — but  poles,  wires,  instruments,  ap 
paratus,  buildings,  patents,  etc.,  than  the  Postmaster  General's 
report  states  to  be  the  cost  of  all  the  telegraph  property  in  the 
country. 

Now,  the  question  which  becomes  necessary  for  this  com 
mittee  to  consider  at  the  outset  is  the  expediency  of  the  Govern 
ment  of  the  United  States  embarking  in  the  telegraph  business. 

The  population  of  the  United  States  is  now  about  40  millions. 
The  number  of  messages  sent  by  all  the  telegraph  lines  in 
the  country  in  a  year  is  less  than  20  millions.  This  fact, 
therefore,  appears:  that  of  every  two  persons  in  the  United 
States,  one  of  them,  once  in  a  year,  has  occasion  to  send  a 
telegraph  message  at  the  average  cost  of  sixty-two  cents,  or 
thirty-one  cents  for  each  person.  Of  the  40  millions  probably 
39  millions  never  send  a  message  at  all,  yet  each  one  of  them 
must  have,  in  every  one  of  the  365  days  in  the  year,  food,  and 
clothing,  and  shelter.  By  what  right  does  the  Government, 
organized  for  the  common  benefit,  and  maintained  at  the 
common  expense,  propose  to  tax  the  whole  people  of  the 
United  States  for  the  convenience  of  so  small  a  percentage 
of  the  population  ?  Is  it  not  a  strange  and  anomalous  condition 
of  things  that  Congress  sits  considering  an  attack  upon  private 
parties  and  property  by  a  department  of  the  Government  which 
seeks  to  inaugurate  proceedings  for  the  acquisition  of  their  pro 
perty,  and  for  embarking  in  the  telegraph  business  at  the  public 
expense,  to  promote  the  convenience  of  a  mere  handful  of  people, 
not  one  of  whom  comes  here  to  complain,  or  to  ask  for  any  re 
lief,  while  thousands  and  tens  of  thousands  are  either  homeless 
or  suffering  for  lack  of  food,  fuel  or  clothing,  and  for  whose 
comfort  the  Government  makes  no  provision  whatever  ? 

I  trust,  Mr.  Chairman,  that  this  committee  will  believe  me 
entirely  sincere  when  I  say  that  neither  on  this  nor  on  any  former 
occasion  have  I  intended  to  be  wanting  in  that  respect  which  is 
due  to  the  members  of  the  committee  and  to  the  officers  of  every 
department  of  the  Government  of  the  United  States.  Six  years 
ago  we  entered,  as  we  supposed,  into  a  compact  with  the  United 
States,  either  that  we  were  to  be  permitted  to  go  on  and  conduct 
our  business  without  Governmental  interference,  or  that  the 
Government  would  take  our  property  at  the  appraisement  of  a 
jury  in  whose  selection  we  should  have  an  equal  voice,  and  that 
we  should  then  be  permitted  to  withdraw  our  capital  and  invest 
it  in  other  enterprises.  Scarcely  was  the  ink  dry  on  the  signature 
that  gave  validity  to  that  act  before  schemes  were  introduced 


125 

into  Congress,  and  have  been  pressed  at  every  session  since, 
which  have  rendered  it  necessary  for  the  officers  and  represent 
atives  of  the  telegraph  to  be  in  attendance  on  Congress,  under 
circumstances  of  great  personal  inconvenience,  at  very  consider 
able  expense,  and  to  the  neglect  and  injury  of  the  business  with 
which  they  are  connected.  If,  therefore,  I  have  sometimes  ex 
hibited  impatience,  it  is,  first,  because  I  am  compelled  always  to 
be  in  a  hurry  ;  and,  secondly,  because  I  have  felt,  as  I  feel  now, 
that  we  have  been  the  injured  party  and  not  the  aggressor  ;  that 
we  have  endeavored  to  keep  in  good  faith  the  compact  into  which 
we  entered  on  the  invitation  of  Congress  ;  and  yet  we  are  obliged 
to  come  here  at  every  session  to  defend  our  property,  our  busi 
ness,  and  our  management  from  unprovoked  assaults  by  parties 
whose  interests  or  whose  prejudices  tempt  them  to  suppress  or 
distort  the  facts,  or  who  for  lack  of  knowledge  and  experience 
seem  unable  to  comprehend  them. 

Let  me  ask,  on  behalf  of  the  property  which  I  represent, 
and  of  the  interests  with  which  I  am  connected,  that  some  defi 
nite  action  be  taken  on  this  subject  at  this  session.  It  is  due  to 
all  the  interests  involved,  as  well  as  to  the  honor  and  good  faith 
of  the  United  States,  that  something  shall  be  settled.  I  stated 
a  few  moments  ago  that  the  Company  with  which  I  am  con 
nected  had  erected,  during  the  year  1872,  20,000  miles  of  wire. 
The  indications  are  that  we  shall  be  required  to  erect,  during  the 
year  1873,  at  least  25,000  miles  of  wire,  notwithstanding  the 
fact  that  we  are  now  engaged  in  equipping  our  lines  with  an  ap 
paratus  which  we  have  demonstrated  to  our  entire  satisfaction  is 
capable  of  doubling  th'e  capacity  of  every  wire  we  have. 
Is  it  unfair,  Mr.  Chairman,  in  anticipation  of  such  an  invest 
ment,  involving  probably  an  expense  of  a  million  of  dollars  on 
the  part  of  the  Western  Union  Company,  and  perhaps  another 
million  by  railroad  companies,  in  connection  with  which  lines 
will  be  constructed,  that  we  should  ask  Congress  to  take  some 
action  by  which  we  can  judge  whether  every  time  we  make 
an  investment  in  this  business  we  put  it  at  hozard.  Is  the  mil 
lion  of  dollars  which  we  shall  probably  invest  during  the  next 
year  to  be  put  at  hazard?  Do  the  United  States  contemplate 
proceeding  for  its  confiscation  ?  At  all  events,  are  we  not  en 
titled  to  notice  as  to  what  the  Government  does  contemplate,  in 
order  that  we  may  elect  whether  to  incur  the  risk  of  investing 
these  large  sums  annually,  or  whether  we  will  retain  and  distri 
bute  them  among  our  stockholders,  I  submit  that  between  man 
and  man  this  would  be  only  fair — that  common  sense  of  justice 
which  is  called  "fair  play."  The  citizen  of  the  United  States  is 
certainly  entitled  to  ask  this  from  the  Government  of  the  United 
States.  We  ask  nothing  more.  We  admit  our  obligation  to 
deliver  our  property  to  the  Government  under  the  provisions  of 


126 

the  Act  of  1866  whenever  Congress  shall  direct  the  appoint 
ment  of  appraisers,  and  shall  appropriate  the  funds  where 
with  to  pay  their  award.  But  we  object  to  this  apparent 
attempt  to  create  a  public  opinion  in  advance  of  the  ap 
praisement,  which  is  to  operate  on  the  appraisers  to  the 
prejudice  of  our  rights.  It  is  not  necessary  to  discuss  the 
question  now,  whether  we  are  entitled,  under  that  Act,  to 
the  simple  cost  of  the  poles  and  wires,  or  whether  we  are 
entitled  to  something  more.  The  value  is  to  be  decided  by  arbi 
tration,  in  accordance  with  the  terms  of  the  Act,  to  which  we  have 
agreed,  and  the  arbitrators  are  the  judges.  We  certainly  shall 
not  agree  to  any  attempt  to  ascertain  first  what  the  appraise 
ment  will  be,  in  order  that  if  it  is  a  good  bargain  you  may 
accept  it,  or,  if  it  is  a  bad  one,  you  may  decline  it.  We  agree 
to  abide  by  the  result  of  arbitration  as  provided  in  the  Act,  and 
I  hope  that  before  Congress  adjourns  some  action  will  be  taken 
which  shall  be  an  indication  to  the  holders  of  shares  in  the 
various  Telegraph  Companies  of  the  United  States,  whether  it 
will  be  prudent  for  them  to  continue  to  hold  such  property,  and 
to  the  managers  of  the  Companies  whether  it  will  be  prudent  for 
them  to  continue  to  invest  a  portion  of  their  earnings  in  the 
extension  of  the  property,  or  what  it  will  be  necessary  for  them 
to  do  to  meet  whatever  shall  appear  to  be  or  shall  be  declared  to 
be  the  determination  of  the  Government  in  that  respect. 

THE  HUBBARD  BILL. 

I  am  quite  unequal  to  the  discussion  of  the  details  of  the  bill 
of  Mr.  Hubbard.  I  now  speak  of  the  bill  as  I  last  saw  it.  If 
the  committee  have  allowed  any  modifications  of  it  I  have  not 
been  apprized  of  them.  But  the  bill,  as  I  last  saw  it,  is  a  scheme 
for  the  incorporation  by  Congress  of  a  Company  authorized  to 
engage  in  the  telegraph  business  in  all  the  States  and  Territories, 
conditioned  that  the  rates  at  which  messages  shall  be  sent  by 
this  Company  shall  be  the  rates  named  in  the  bill,  which  rates 
are  apparently  considerably  less  than  the  present  average  rates. 
But  there  is  a  provision  in  the  bill  authorizing  "  priority  mes 
sages  "  at  double  rates.  But,  Mr.  Chairman,  every  message  is  a 
priority  message.  That  is  what  the  telegraph  is  for.  And 
you  will  appreciate,  I  think,  the  force  of  that  on  learning  the 
following  facts:  It  is  now  three  years  since,  throughout  the 
territory  east  of  the  Missouri  River,  messages  could  be  filed  at 
any  telegraph  office  at  any  time  during  the  day  for  transmission 
at  the  convenience  of  the  Company,  and  for  delivery  on  the 
following  morning  at  half  the  tariff  rates.  That  provision  has 
been  in  operation  three  years.  It  is  thoroughly  well  known  to 
all  people  who  have  occasion  to  use  the  telegraph  ;  and,  although 
the  rates  from  New  York,  Boston,  Philadelphia,  Baltimore  and 


127 

Washington  to  Texas,  Western  Arkansas  and  Kansas,  are 
$3  to  $3.50  for  a  single  message,  with  a  few  hours  difference  of 
time,  and  without  any  inconvenience  to  the  customer  as  to  the 
filing  of  the  message  at  half  these  rates,  the  fact  is  that  at  this 
time,  after  three  years  of  use,  but  eleven  per  cent,  of  the  tele 
graph  business  is  done  under  this  provision  of  half  rates. 

The  CHAIRMAN. — Is  that  arrangement  made  by  all  the  other 
Companies  as  well  as  yours  ? 

Mr.  ORTON. — Yes,  sir;  all  of  them.  Mr.  Thurston,  President 
of  the  Pacific  and  Atlantic  Company,  I  suppose  (as  I  did  not 
file  a  caveat)  is  entitled  to  a  patent  on  that  scheme.  I  think,  if 
he  was  entirely  frank,  he  would  admit  that  he  knew  we  were 
going  to  do  it ;  but  he  did  it  first,  because  it  took  us  a  great 
while  to  work  up  the  details  before  putting  it  in  operation,  and 
so  he  started  it  on  his  lines  before  we  did  on  ours.  But  it  has 
been  in  operation  on  all  the  lines  of  all  the  Companies  during 
the  last  three  years.  It  did  not  at  first  include  any  territory 
west  of  the  Mississippi  river. 

Mr.  THURSTON". — I  wish  to  disclaim  the  credit  of  being  so 
much  smarter  than  the  President  of  the  Western  Union  Tele 
graph  Company,  and  I  am  happy  to  concede  to  him  the  com 
pliment  of  having  originated  the  proposition  of  sending  these 
night  despatches  at  half  rates.  It  was  the  principle  on  which 
our  line  was  first  created  that  that  should  form  a  feature  of  it 
when  the  line  was  sufficiently  extended  to  do  so;  and  we  had 
it  in  contemplation,  it  seems,  at  the  same  time  as  the  Western 
Union  people,  without  each  other  knowing  it. 

The  CHAIRMAN. — Is  the  fact  that  you  have  such  an  arrange 
ment  so  generally  known  to  your  customers  that  the  eleven 
per  cent,  represents  the  voluntary  choice  of  the  people ;  or  is  it 
true  that  a  considerable  portion  of  your  customers  do  not  know 
of  the  existence  of  that  half  rate  ? 

Mr.  ORTON. — When  we  inaugurated  this  scheme  we  consid 
ered  that  the  people  who  sent  and  received  messages  every 
day  were  the  people  whom  it  was  to  our  interest  to  notify 
first.  The  half  rate  message  blank  is  printed  in  red  ink. 
These  blanks  were  distributed,  as  other  message  blanks  are 
distributed,  freely  among  the  customers  of  the  telegraph.  A 
small  advertisement,  of  a  size  suitable  to  be  enclosed  in  the  en 
velope  in  which  messages  are  delivered  to  our  customers,  printed 
also  in  red,  was  printed  to  the  extent  of  many  millions,  and  was 
supplied  to  the  various  offices  of  the  Company,  and  a  copy  was 
placed  in  the  envelope  with  every  message  delivered  for  several 
months.  We  argued  that  in  the  course  of  three  months,  if  an 
advertisement  went  out  with  every  message  delivered,  we  should 
probably,  during  that  period,  reach  the  great  majority  of  those 
who  patronize  the  telegraph.  In  addition  to  that  cards  were 


128 

provided  and  directed  to  be  suspended  in  the  telegraph  offices. 
The  blanks  themselves  are  exposed  there.  And  still  more  re 
cently  I  directed  an  advertisement  to  be  printed  prominently  on 
the  envelopes  used  for  enclosing  messages  to  be  delivered.  We 
have  taken  the  utmost  pains  to  inform  the  public  of  the  fact,  and 
we  believe  the  public  is  well  informed  of  it.  Certainly  that  is 
the  case  among  those  who  are  most  in  the  habit  of  using  the 
telegraph. 

The  CHAIRMAN. — Does  this  half  fare  arrangement  apply  to 
all  your  rates  ? 

Mr.  ORTON. — Yes,  sir;  to  every  office  east  of  the  Missouri 
Eiver,  including  Kansas,  Missouri,  Arkansas,  Louisiana  and 
nearly  all  of  Texas. 

The  CHAIRMAN. — Between  here  and  New  York,  and  between 
here  and  Boston,  and  between  Boston  and  New  York  ? 

Mr.  ORTON. — Yes,  sir.  We  do  not  include  in  it  the  Pacific  coast, 
for  the  reason  that  the  line  is  so  long  and  the  difference  in  time 
is  three  hours.  The  great  difficulty  in  maintaining  that  line, 
its  liability  to  interruptions  and  the  certainty  that  day  and  night 
business  would  get  confused,  has  induced  us  to  withhold  putting 
it  into  operation  on  the  Pacific  coast.  We  intend,  however,  in 
lieu  of  that,  to  reduce  the  rates  between  the  Atlantic  and  Pacific 
coasts  at  an  early  day — to  still  further  reduce  them.  They  are 
only  about  one  half  now  what  they  were  six  years  ago. 

Now  let  me  return  to  the  Hubbard  bill.  I  spoke  of  one  of 
the  provisions  of  that  bill,  being  the  authority  to  charge  double 
the  rates' named  therein  for  messages  entitled  to  priorit}',  and  I 
expressed  the  opinion  that  every  message  was  a  priority  messtage  ; 
and  I  appealed  to  the  fact  that  eighty-nine  per  cent,  of  the  business 
of  the  Western  Union  Telegraph  Company  is  priority  business,  or 
what  would  be  priority  business  under  the  provisions  of  this 
bill.  Therefore,  taking  the  present  day  rates  and  night  rates, 
and  striking  the  average,  the  priority  rate  under  Mr.  Hubbard's 
bill  is  higher  on  the  average  than  the  present  average  rate.  The 
bill,  when  I  last  saw  it,  provided  for  an  issue  of  $1,000,000  of 
stock,  without  any  other  consideration  than  the  vague  expression 
u  for  expenses  of  organization."  It  contained  no  stipulation  or 
guarantee  on  the  part  of  the  corporators  that  any  single  thing 
promised  on  the  part  of  the  corporation  to  be  created  by  the 
bill  should  be  performed.  It  is  a  stupendous  job  ;  an  attempt 
to  get  the  sanction  of  Congress  to  a  scheme  to  enable  stock  to 
be  floated,  one  million  dollars  of  which  could  be  divided  among 
the  corporators,  without  the  obligation  to  account  for  a  single 
dollar  of  it.  When  that  has  been  done  it  is  a  good  enough 
thing  for  its  beneficiaries,  if  they  never  erect  a  pole  or  string  a 
mile  of  wire  ;  and  I  predict  that  if  that  bill  shall  become  a  law 
the  Company  created  by  it  will  never  build  a  thousand  miles  of 


129 

telegraph  line.  And  yet  it  may  be  a  splendid  thing  for  its 
promoters.  It  will  do  the  public  no  good,  and  do  the  Govern 
ment  no  good  ;  on  the  contrary,  if  this  scheme  should  fail,  would 
it  not  have  discredited  Governmental  connection  with  the  tele 
graph  ;  would  it  not  postpone  the  time  (if  that  time  is  ever  to 
come)  when  the  Government  shall  control  the  business? 

The  CHAIRMAN. — Please  to  explain  precisely  what  you  mean 
when  you  say  that  the  corporators  may  make  a  good  thing  of  it 
without  their  erecting  a  pole  or  building  a  mile  of  line? 

Mr.  ORTON. — When  this  bill  becomes  a  law,  I  assume  that 
the  first  thing  to  be  done  under  it  is  to  organize  the  corpora 
tion  ;  the  next  thing  inevitably  is  to  sell  some  of  the  stock,  for 
until  the  proceeds  of  the  sale  of  the  stock  are  on  hand  they 
certainly  will  have  nothing  with  which  to  buy  lines  that  are 
already  built  or  to  build  new  ones.  Suppose  they  sell  $1,000,- 
000  of  stock,  and  no  more — they  have  a  right  to  distribute 
that  among  the  corporators,  and  are  under  no  obligation 
to  account  to  anybody  for  it.  I  assume  that  no  moral 
question  is  involved  in  connection  with  taking  that  which 
Congress  freely  gives.  I  certainly  raise  no  such  question. 
If  Congress  gives  the  authority  to  twenty  or  thirty  gentle 
men  to  collect  $1,000.000  from  the  public,  and  to  distri 
bute  it  among  themselves,  that  is  about  the  highest  right 
to  property  I  know  of.  But  Congress  exacts  nothing  from 
them  in  return,  imposes  no  obligation  on  them  then  and  there 
after  to  do  anything.  But  suppose  they  should  get  $2,000,000 
of  stock  and  divide  the  $1,000,000,  and  then  faithfully  and  ju 
diciously  expend  the  other  million,  and  the  scheme  fails.  They 
have  burrowed  a  hole  in  the  Post-office,  interfered  with  and  in 
terrupted  the  postal  service,  vexed  and  harrassed  the  customers 
of  the  telegraph,  who  have  been  many  times  caught  sending 
messages  by  the  Government  line  to  points  not  reached  by  it,  dis 
gusted  the  public  generally  ;  and  certainly  it  seems  to  me  that 
the  people  will  not  be  in  a  very  evangelical  frame  of  mind  to 
wards  Governmental  connection  with  the  telegraph,  with  such  a 
specimen  of  the  results  before  them. 

But  suppose  it  goes  on  and  does  better,  what  then  ?  The 
Government  has  created  a  monopoly  of  which  it  can  never  be 
rid  except  by  purchase.  There  may  be  no  obligation  on  the 
part  of  the  Government  to  buy  the  existing  lines ;  there  certainly 
would  be  an  obligation  on  the  part  of  the  Government  to  buy 
that  line.  I  submit  that  every  share  of  stock  subscribed  to  the 
corporation  created  by  this  Act  would  be  so  subscribed  on  the 
inducements  held  out  by  the  Government  of  the  United  States, 
either  that  that  Company  is  to  make  ten  per  cent  on  its  capital, 
with  an  added  million  for  expenses  of  organization,  or,  failing 
in  that,  the  United  States  is  to  buy  the  property. 


130 

Now,  I  read  in  the  public  prints  that  the  Secretary  of  the 
"Treasury  has  recently  been  before  a  committee  of  Congress,  ask 
ing  for  legislation  to  enable  him  to  pay  a  larger  commission 
than  is  now  allowed  by  law  for  the  negotiation  of  bonds  of  the 
United  States  at  a  lower  rate  of  interest  than  is  paid  on  the 
greater  part  of  the  public  debt.  This  bill  is  a  scheme  to 
enable  a  private  corporation,  after  its  corporators  have  made 
$1,000,000,  to  make  ten  per  cent  on  all  the  balance  of  their 
investment,  with  the  one  million  included.  What  is  the  pro 
priety  of  such  a  partnership,  with  such  a  quasi  guarantee  of  such 
a  rate  of  interest,  on  the  part  of  the  United  States,  which  cer 
tainly  is  abundantly  able  to  go  into  market  and  borrow  money 
at  half  that  rate  of  interest?  What  is  the  necessity  for  the 
Government  to  set  up  partners  in  the  business  who  do  not  own 
a  rod  of  telegraph  in  the  United  States,  and  who  never  did  an 
hour's  work  at  the  telegraph  business  in  their  lives — what  is  the 
propriety  of  the  Government  setting  up  such  parties  in  opposi 
tion  to  the  capital  and  experience  which,  for  more  than  twenty 
years,  have  been  developing  a  telegraph  system  which,  notwith 
standing  the  disparaging  statements  made  concerning  it  in  the 
report  of  the  Postmaster  General,  compares  favorably  with  any 
telegraph  system  on  the  globe  ? 

Now,  a  word  on  the  subject  of  rates.  More  than  sixty 
per  cent,  of  the  cost  of  conducting  the  telegraph  business  is  paid 
for  labor,  yet  we  are  obliged  constantly  to  meet  statements  and 
arguments  based  upon  the  rates  paid  in  Europe. 

THE  CHAIRMAN. —  Does  that  refer  to  the  running  expenses, 
or  to  the  building  expenses  as  well  ? 

Mr.  ORTOK — It  refers  to  conducting  the  business.  Sixty  per 
cent,  ot  the  whole  cost  is  for  labor. 

Mr.  NIBLACK. — What  do  you  include  in  the  word  "  labor  " — 
do  you  include  operators  ? 

Mr.  ORTON. — I  include  the  wages  of  operators,  of  course.  It 
is  a  work  of  men  and  of  hands,  not  of  steam  engines— a  work  of 
individuals,  the  expense  of  which  increases  almost  in  the  direct 
ratio  of  the  increased  volume  of  business.  It  is  all  very  well  to 
say  that  if  you  have  an  immense  mass  of  it  it  can  be  done  more 
cheaply.  Ask  the  stenographer  there  who  is  reporting  these 
proceedings  how  much  cheaper  he  can  work  if  he  has  the 
work  of  four  men  put  upon  him  at  once.  There  is  a  limit  to 
human  capacity.  If  correspondence  were  all  paid  for  by  the 
written  word,  would  the  price  of  it  be  any  cheaper  if  the 
volume  was  largely  increased  ?  And  yet  every  word  of  every 
message  is  written  out  in  detail  by  the  fingers  of  the  tele 
graph  operator.  No  matter  how  you  may  increase  the  speed  of 
transmission,  or  cheapen  some  of  the  processes,  every  single  mes 
sage  is  the  product  of  the  labor  of  human  fingers.  Now,  I 


131 

understand  it  to  have  been  the  settled  polic}7  of  every  adminis 
tration  for  more  than  forty  years  to  secure  a  higher  rate  of 
wages  for  labor  in  the  United  States  than  is  paid  in  any  other 
country ;  and  especially  has  it  been  the  policy  of  the  United 
States  to  protect  its  laboring  citizens  from  competition  with  the 
product  of  the  cheaper  labor  of  continental  Europe.  In  view  of 
this  fact,  and  of  that  which  I  have  already  stated — that  more 
than  sixty  per  cent,  of  the  current  expenses  of  conducting  tele 
graph  business  is  paid  directly  in  wages — is  it  fair  to  ask  that 
private  capital  and  enterprise  shall  perform  in  this  country  a 
service  which  is  so  largely  the  product  in  detail  of  labor,  at  rates 
corresponding  with  a  similar  service  in  other  countries?  I  be 
lieve  it  is  susceptible  of  simple  demonstration  that,  considering 
the  difference  in  cost  of  labor  and  of  material  in  Europe  and  in 
the  United  States,  telegraphing  in  the  United  States  is  decidedly 
cheaper  than  in  any  country  in  Europe- — I  was  going  to  say 
than  the  average,  but  I  say  in  any  country  in  Europe.  If  you 
will  consider  the  difference  simply  in  the  wages  paid  to  the  em 
ploye's,  and  the  difference  in  the  cost  of  materials,  you  will 
find  that  telegraphing  is  cheaper  in  the  United  States  than 
in  any  country  in  Europe. 

But  that  is  not  all :  A  day's  work  by  the  employes  of  the 
Government  is  limited  by  law  to  eight  hours,  while  the  em 
ploye's  of  the  telegraph  are  required  to  work  at  least  ten,  and  in 
many  cases  twelve  hours.  I  assume  it  will  not  be  claimed  that 
the  same  persons  in  the  employ  of  the  Government  would  do 
any  more  work  in  the  same  time  than  if  in  the  service  of  pri 
vate  parties ;  or  that  the  former  could  hire  telegraph  operatives 
at  lower  rates  of  wages  than  are  now  paid.  It  follows,  there 
fore,  that,  on  the  basis  of  eight  hours  as  a  day's  work,  the  present 
annual  expenditure  to  operate  the  telegraph  would  yield  a  pro 
duct  twenty  per  cent,  less  than  the  present,  or  that  to  maintain 
the  present  product  would  require  an  increase  of  force  and  of 
expenditure  twenty -five  per  cent,  greater  than  the  present. 
Surely,  the  Government  would  not  discriminate  against  opera 
tives  and  mechanics  in  the  telegraphic  department  of  its  busi 
ness,  and  require  them  to  work  from  two  to  four  hours  more  a 
day  than  is  now  required  of  Government  clerks,  mechanics  and 
laborers. 

In  the  report  of  the  Postmaster  General  reference  is  made 
to  the  Government  Telegraph  of  Great  Britain,  and  con 
siderable  space  is  devoted  to  the  consideration  of  the  ques 
tion  of  a  uniform  rate.  Now,  sir,  I  admit  that,  if  it  were 
practicable  to  remove  the  40,000,000  of  people  of  the  United 
States  into  the  territory  comprised  in  the  States  of  New  England 
and  New  York,  it  would  be  entirely  practicable  to  establish  a 
uniform  rate.  But  see  ho\v  unjust  it  is  to  compare  this  country 


132 

with  Great  Britain  or  France,  each  having  a  population  ap 
proximating  to  our  own,  settled  on  an  area  but  little  larger  than 
New  England,  while  our  population  is  spread  over  an  area 
equal  almost  to  the  continent  of  Europe.  Ten  to  fifteen  miles  of 
telegraph  must  be  constructed  and  kept  in  repair  in  the  United 
States  to  reach  the  same  number  of  persons  as  in  Great  Britain  or 
France  are  reached  by  one  mile  ;  and  when  you  consider  that  it 
costs  on  an  average  eight  dollars  per  mile  of  wire  per  annum  to 
keep  constructed  lines  in  repair,  you  will  see  what  a  difference 
there  is  in  favor  of  those  countries  of  denser  population.  Permit 
me  to  remark,  further,  in  connection  with  the  English  telegraph, 
which  is  represented  to  be  a  success  (and  I  believe  it  to  be  a 
success  so  far  as  its  adminstration  is  concerned),  that  I  think 
very  erroneous  views  are  entertained  concerning  the  result  of  its 
operations  financially.  "Whatever  it  may  become  hereafter,  the 
British  telegraph  has  cost  the  British  Government  more  money 
every  month  since  it  has  been  in  operation  under  the  Govern 
ment  than  it  has  received  in  revenue  from  such  operations. 
Now,  I  am  aware  that  an  exhibit  has  been  made  showing  a 
profit.  I  have  examined  that  exhibit  carefully  ;  and  find  that 
the  apparent  profit  resulting  from  the  operation  of  the  British 
telegraph  is  obtained  by  charging  an  arbitrary  sum  to  capital 
account.  There  is  no  evidence  yet  to  satisfy  me  that  the  Brit 
ish  telegraph  is  self-sustaining  to-day.  And  yet  it  ought  to 
be  self-sustaining,  and  I  have  no  doubt  that  it  will  ultimately 
become  self-sustaining.  Very  much  has  been  said  concerning 
the  enormous  increase  in  the  volume  of  business  since  the  Eng 
lish  Government  took  the  telegraph  and  established  a  uniform 
rate.  Let  me  make  a  statement  in  that  connection.  There  are 
no  more  messages  sent  in  Great  Britain  to  daj^,  in  proportion  to 
the  number  of  miles  of  wire  and  the  number  of  stations  and 
of  employes,  than  there  were  before  the  Government  took  the 
lines  from  private  hands  and  established  a  uniform  rate.  This 
is  a  very  important  fact,  because  there  is  involved  in  it  the  very 
essence  of  the  law  governing  the  development  of  the  telegraph 
business. 

The  CHAIRMAN. — Is  that  the  statistical  rule  on  which  tele> 
graph  companies  consider  growth  to  be  gauged  ? 

Mr.  ORTON. — I  am  now  about  to  state  what  I  consider  to  be 
the  rule.  It  is,  that  the  increase  in  the  volume  of  telegraph 
business  is  more  directly  proportioned  to  the  increase  of  facili 
ties  than  it  is  to  any  question  of  rates  \yhatever  ;  and  I  would 
make,  without  the  slightest  hesitation,  a  wager  covering  the  cost 
of  the  experiment,  that  if,  say,  between  four  cities,  the  experiment 
should  be  tried,  in  the  one  case,  of  reducing  the  rate  one  half, 
and,  in  the  other  case,  of  doubling  the  facilities  without  any  re 
duction  of  the  rates,  the  double  volume  of  business  will  come 


133 

quicker  on  the  doubled  facilities  than  on  the  reduced  rates. 
Now,  that  is  my  opinion,  and  I  would  be  glad  to  hear  the  views 
of  the  other  gentlemen  present,  with  whom  I  have  not  conferred. 

Mr.  THURSTON. — I  fully  confirm  the  opinion  of  the  President 
of  the  Western  Union  Telegraph  Company.  We  have  found  it 
so  on  our  lines.  And  to-day  W3  find,  as  the  result  of  our  busi 
ness,  that,  with  what  has  been  called  increased  rates,  over  those 
that  existed  up  to  the  1st  of  May,  the  want  of  facilities  alone 
prevents  our  business  increasing  ;  and  we  are  now  increasing 
our  facilities  in  order  to  increase  our  business. 

Mr.  SWEET. — Mr.  Orion  asked  me  that  question  to-day  on  the 
train,  and  I  have  been  turning  the  thing  over  in  my  mind.  I 
believe  his  statement  to  be  substantially  correct,  so  far  as  my  ex 
perience  goes. 

The  CHAIRMAN. — Does  that  indicate  to  your  mind  that  the 
demand  is  for  greater  facilities  rather  than  for  cheaper  rates  ? 

Mr.  SWEET. — For  greater  and  more  rapid  facilities.  The  ex 
perience  of  night  rates  will  demonstrate  that.  The  question  is 
not  one  of  cheap  rates  ;  it  is  upon  the  question  of  facilities,  and 
of  the  rapidity  with  which  messages  are  transmitted  and  de 
livered,  that  the  increase  of  business  depends. 

The  POSTMASTER  GENERAL  (to  Mr.  Thurston). — You  say  that 
your  business  increases  if  you  increase  facilities,  notwithstanding 
that  the  prices  may  be  also  increased.  Suppose  your  prices 
were  lowered,  would  not  the  business  be  increased  by  that  ? 

Mr.  THURSTON. — My  experience  in  telegraph  business  brings  it 
down  to  a  very  small  point.  It  is,  that  no  man  sends  a  telegraph 
message  for  the  mere  pleasure  of  telegraphing.  He  merely  sends 
it  in  order  to  gain  time,  or  to  make  the  profio  which  he  expecis 
to  gain  by  economizing  time,  by  forestalling  the  market,  or  some 
thing  else  ;  and  the  question  with  him  is  not  so  much  the  cost 
of  a  message  as  the  speed  with  which  it  is  delivered.  So,  if  you 
take  a  line  between  two  large  cities,  with  only  one  wire,  and  if 
you  make  the  price  of  messages  as  low  as  you  possibly  can,  the 
public  will  not  be  accommodated,  and  the  business  will  not  in 
crease;  but,  if  you.  put  up  more  wires,  and  increase  the  facilities 
for  telegraphing,  you  increase  the  business. 

The  POSTMASTER  GENERAL. — That  increase  of  business  is  ob 
tained  by  multiplying  the  wires. 

Mr.  THURSTON. — Yes.  By  increasing  the  facilities  and  keep 
ing  the  rates  at  the  same  price. 

The  POSTMASTER  GENERAL. — Then  it  is  unlike  the  postal  busi 
ness,  and  unlike  the  telegraph  business  in  other  countries. 

Mr.  THURSTON. — Take  a  large  city  like  Pittsburg,  where  I 
reside,  which  is  a  manufacturing  city,  and  take  a  factory  there 
employing  400  people,  and  you  will  find  that  it  is  only  one  out 
of  the  four  hundred  that  ever  uses  the  telegraph ;  the  other 


134 

399  do  not  send  a  message  in  a  year  ;  but  the  one  sends  fifty  or 
a  hundred  messages  in  a  day  ;  and  we  must  use  him  as  a  mer 
chant  would  use  a  customer — we  must  give  him  the  facilities 
that  he  wants.  The  question  with  him  is  not  one  of  price,  but 
one  as  to  how  the  service  is  performed. 

The  POSTMASTER  GENERAL. — That  would  be  the  question 
with  a  great  many  more  people  if  they  had  facilities,  and  if  the 
telegraph  was  cheap  enough  to  be  within  their  reach. 

The  CHAIRMAN. — Mr.  Brown,  what  is  your  opinion  upon  the 
point  ? 

Mr.  BROWN. — My  impression  is  that  the  experience  in  some 
parts  of  the  country  has  been  that  reducing  the  rates  has  very 
vastly  increased  the  business,  as  in  the  West,  for  instance.  I 
learned  from  Mr.  Orton  that  putting  the  rate  down  to  ten  cents 
between  Chicago  and  Milwaukee  increased  the  business  very 
vastly  ;  but  my  impression  has  been  that  when  a  man  pays  25 
or  30  cents  for  a  segar  he  does  not  care  very  much  whether  he 
pays  five  cents  more  or  less  for  a  telegraph  message. 

Mr.  PALMER  (to  Mr.  Orton).— If  cheapening  rates  does  not 
increase  the  volume  of  business  why  do  you  cheapen  rates  ? 

Mr.  ORTON. — Have  I  been  understood  as  saying  that  cheapen 
ing  the  rates  did  not  increase  the  volume  of  business  ? 

Mr.  PALMER. — I  thought  that  the  tendency  of  your  argument 
was  to  show  that  it  was  the  increase  of  facilities  rather  than  the 
reduction  of  prices  that  brought  an  increase  of  business. 

Mr.  ORTON. — Both  of  them  tend  undoubtedly  to  increase  the 
business,  but  I  believe  that  the  development  of  the  telegraph 
depends  more  Upon  the  provision  of  increased  facilities  than  on 
the  reduction  of  rates — assuming,  of  course,  that  the  rates  are  not 
exorbitant  and  prohibitary,  but  taking  the  average  rates  as  they 
are  to-day  in  the  United  States.  And  now  let  me  support  this : 
The  tariff  between  New  York  and  Cincinnati  six  years  ago  was 
$1.85  a  message.  Under  the  active  competition  inaugurated  by 
the  Company  of  which  Mr.  Thurston  is  the  president,  the  rates 
were  reduced  to  $1.50,  $1.25,  $1.00  and  finally  to  60  cents.  At 
that  rate  the  lines  were  operated  for  two  years.  The  rates  to 
intermediate  places  were  reduced  correspondingly,  the  rate  be 
tween  New  York  and  Pittsburg  being  25  cents.  On  the  1st  of 
May  last,  by  previous  agreement,  the  rate  between  New  York 
and  Cincinnati  was  advanced  from  60  cents  to  one  dollar,  and 
between  New  York  and  Pittsburg  from  25  to  50  cents.  Within 
the  year  preceding  the  Western  Union  Telegraph  Company  had 
very  considerably  increased  its  facilities  between  New  York, 
Pittsburg  and  Cincinnati.  The  increase  in  the  volume  of  busi 
ness  between  the  stations  on  that  route,  during  the  months  of 
May,  June  and  July  of  the  present  year,  after  an  advance  of 
from  forty  to  one  hundred  per  cent.,  was  greater  than  the  in 
crease  in  the  corresponding  months  in  the  previous  years. 


135 

The  CHAIRMAN. — Had  there  been  an  increase  in  the  facilities  ? 

Mr.  ORTON. — Yes,  I  stated  that  as  part  of  my  preliminary 
statement. 

The  CHAIRMAN. — What  was  the  percentage  of  the  increased 
facilities  ? 

Mr.  ORTON. — I  cannot  answer  that  very  well.  The  facilities 
between  two  such  cities  as  New  York  and  Cincinnati  do  not  de 
pend  upon  the  number  of  wires  on  any  one  route,  although  that 
route  may  be  the  one  mainly  used  for  the  business  between 
those  two  stations.  It  is  the  general  increase  of  facilities  East 
and  West  on  the  lines  that  are  available  between  the  two  sections. 
I  do  not  mean  to  say  that  the  way  to  get  a  larger  increase 
of  business  next  year  than  we  have  had  heretofore  is  to  make 
a  further  -  increase  in  the  tariff;  I  presume  I  shall  not  be  mis 
understood  in  that  regard.  I  merely  bring  this  illustration  in 
support  of  the  opinion  which  I  expressed  as  to  the  law  govern 
ing  the  development  of  the  telegraph  business — first  that  it  is  a 
question  of  facilities,  and  that,  until  ample  facilities  are  provided 
for  the  existing  volume  of  business,  there  is  certainly  no  great 
inducement  to  make  a  reduction  of  rates.  It  costs  a  good  deal 
of  money  to  provide  those  additional  facilities.  The  Western 
Union  Telegraph  Company  has  erected  within  the  last  two 
years  a  wire  of  unusual  size  in  this  country — number  six  gauge — 
between  New  York  and  Chicago.  It  is  now  completing  one 
between  New  York  and  Cincinnati  of  the  same  gauge,  and  has 
ordered  another  of  the  same  gauge  between  Pittsburg  and 
Chicago. 

The  CHAIRMAN. — Is  there  any  other  relation  to  the  size 
except  strength  ? 

Mr.  ORTON. — The  question  of  strength  does  noTelTtSr  into  the 
case  at  all.  The  distance,  telegraphically,  between  two  stations 
depends  upon  the  size  of  the  conductor,  and  it  is  possible  to 
bring' New  York  and  San  Francisco  telegraphically  within  the 
same  distance  as  New  York  and  Boston,  if  you  make  the  con 
ductor  large  enough.  On  these  larger  conductors  we  are  intro 
ducing  Steam's  duplex  system.  We  not  only  provide  an 
additional  wire,  but  we  equip  it  at  once  with  an  apparatus 
which  gives  it  double  power.  We  bring  Cincinnati  and  New 
York  nearer  together  telegraphically,  and  we  make  each  wire 
equal  to  two. 

If  I  am  not  wearying  the  patience  of  the  committee,  I  would 
make  a  statement  or  two  further  in  this  connection.  It  will  cost 
for  the  wire  which  we  contemplate  erecting  between  New  York 
and  St.  Louis  this  spring  at  least  $100,000 — for  one  additional 
wire.  Suppose,  for  illustration,  that  there  were  but  one  wire 
between  New  York  and  St.  Louis,  and  that  it  had  been  until 
recently  capable  of  transmitting  the  volume  of  business  required 


136 

to  be  transmitted  between  those  two  cities ;  but  the  inevitable 
growth,  resulting  partly  from  the  use  of  the  telegraph,  and  partly 
from  the  increase  of  population,  and  the  development  of  busi 
ness,  carries  the  development  of  telegraph  business  ten  per  cent, 
beyond  the  capacity  of  that  wire,  it  then  becomes  necessary  to 
duplicate  the  entire  investment,  less  the  cost  of  the  poles.  Now, 
on  this  point  let  make  a  remark  concerning  the  most  unfortu 
nate  errors  which  the  Postmaster  General  has  permitted  an  un 
informed  person  to  put  upon  him  and  upon  the  country  with 
official  sanction.  He  states  that  the  cost  for  additional  wires  is 
$30  per  mile.  Now,  the  smallest  gauge  of  wire  we  use — No.  9 
— weighs  340  Ibs.  to  the  mile,  and  it  is  worth  to-day  in  the  port 
of  New  York  10£  cents  per  pound.  It  requires  very  little 
knowledge  of  arithmetic  to  show  that  the  cost  there,  before  you 
have  considered  very  far  the  question  of  making  a  telegraph,  is 
about  $36  a  mile!  And  then,  when  it  comes  to  transporting  the 
wire  an  average  of  at  least  a  thousand  miles  over  the  United 
States,  hundreds  of  miles  on  the  backs  of  pack  horses  to  the  place 
where  it  is  to  be  erected,  together  with  the  insulators,  cross- 
arms,  tools  and  other  requisite  appliances  for  erecting  it,  I  must 
confess  my  surprise  at  the  declaration  of  the  Postmaster  General 
in  an  official  document  that  additional  wires  can  be  erected  in 
the  United  States  at  a  cost  of  $30  a  mile. 

The  CHAIRMAN. — I  have  just  made  a  little  figuring  here  from 
your  statement.  I  understand  you.  to  say  that  the  Western 
Union  Telegraph  Company  would  probably  erect  next  year 
25,000  additional  miles  of  wire,  at  a  cost  of  about  a  million  of 
dollars  ;  that  would  be  forty  dollars  a  mile,  which  is  not  very 
far  from  the  estimate  of  the  Postmaster  General. 

The  POSTMASTER  GENERAL. — With  the  duty  off  it  is  less  than 
thirty  dollars  a  mile. 

The  CHAIRMAN  (to  Mr.  Orton). — Did  I  misunderstand  you  ? 

Mr.  ORTON — You  did  not  misunderstand  me.  I  was  not 
trving  to  be  exact  when  I  spoke  of  the  cost  as  being  a  million 
of  dollars,  and  I  had  in  my  mind  only  the  expenditure  which 
the  Western  Union  Company  would  make.  In  the  erection  of 
25,000  miles  of  new  telegraph  wire,  it  is  probable  that  from  one 
third  to  one-half  of  the  total  cost  would  be  contributed  by  rail 
road  companies.  We  are  building  a  good  deal  of  line  every 
year  at  the  cost  of  our  Company  of  only  the  wire?  insulators  and 
instruments ;  the  poles  being  provided  and  all  the  labor  per 
formed,  except  that  of  a  competent  foreman,  by  the  railroad  com 
panies.  Yet  such  lines,  when  completed,  are  as  exclusively  ours 
for  use  in  transmitting  messages  for  the  public  as  if  we  had 
made  the  entire  investment  necessary  to  create  them.  In  return 
for  the  contribution  of  the  railroad  companies  we  perform  service 
for  them  on  other  lines.  While,  therefore,  the  addition  of  25,000 


137 

miles  of  wire  might  not  be  entered  as  costing  the  Western  Union 
Company  in  cash  invested  at  the  time  more  than  $40  to  $50  a 
mile,  the  total  cost  might  be  twice  as  much,  the  balance  being 
contributed  by  railroad  companies,  or  charged  to  profit  and  loss. 
The  addition  of  a  single  wire  may,  and  frequently  does,  involve 
the  necessity  of  the  reconstruction  of  the  entire  line,  including 
the  provision  of  new  poles  of  larger  carrying  capacity.  In  that 
case  the  cost  to  the  Western  Union  Company  of  the  additional 
wire  only  would  be  charged  to  construction,  the  other  expenses 
being  put  to  profit  and  loss  account,  although  the  value  of  the 
whole  line  has  been  increased  far  beyond  that  of  the  additional 
wire.  But  when  the  additional  wire  has  been  erected  as  many 
operators  are  required  to  operate  it  as  if  it  were  the  only 
wire  on  that  route.  It  takes  just  as  many  operators  to 
operate  a  second  wire  as  it  did  for  the  first  wire,  and  it 
will  transmit  as  much  matter  as  the  first  one  did,  so  that 
the  expense,  in  connection  with  the  increased  volume  of 
business,  keeps  proportional  with  the  increased  volume ;  while 
every  time  the  increase  reaches  a  certain  figure  we  must 
duplicate  the  investment — perhaps  not  absolutely,  but  we  must 
make  a  very  large  addition  to  that  investment. 

Suppose  that  when  the  traffic  of  a  railroad  reached  cer 
tain-  figures  it  became  necessary  to  lav  down  a  new  track,  and  to 
provide  a  separate  equipment  for  that  track,  and  a  separate  staff 
for  each  department  of  its  operations,  you  will  see  in  a  moment 
that  a  very  large  increase  in  business  might  become  a  great 
misfortune.  So  it  has  been  found  by  our  friends,  who  have 
sought  the  favor  of  the  public  in  competition  with  the  Western 
Union  Telegraph  Company  by  reducing  their  rates,  that  that 
was  the  short  and  sure  road  to  destruction.  And  we  are  also 
quite  satisfied  with  the  result  of  that  experience,  since  the 
difference  in  our  own  revenues  by  the  larger  rates  enables  us  to 
provide  the  additional  wires,  which,  being  provided,  constitute 
the  ability  of  the  stronger  Company  always  to  compete  success 
fully  with  the  weaker. 

A  single  remark  more.  If  it  were  true  that  all  the  telegraphs 
in  the  country  could  be  reproduced  for  ten  or  eleven  millions 
of  dollars,  would  not  that  fact  alone  afford  ample  protection  to  the 
people  of  the  United  States  from  any  very  severe  oppression  on 
the  part  of  Telegraph  Companies  ?  Is  there  any  danger  to  the 
people  of  the  United  States  from  companies  whose  property  can 
be  duplicated  for  so  small  a  sum  of  money  ?  But,  whether  it  is 
ten  millions  or  fifty  millions,  or  whatever  the  sum  may  be,  there 
is  no  business  of  like  general  importance  that  can  be  established 
on  so  comparatively  small  a  capital.  A  single  wire  between 
New  York  and  Washington  governs  the  tariff  on  40  wires.  If 
the  line  which  Mr.  Thurston's  Company  is,  I  believe,  now  work- 


138 

ing  into  Washington- — a  line  of  one  wire — should  elect  to-morrow 
to  reduce  the  rate  between  New  York  and  Washington  one 
half,  it  would  be  necessary  for  the  Western  Union  Company 
to  follow  in  that  reduction  ;  for,  although,  if  we  did  not  follow, 
the  public  would  be  obliged  still  to  give  the  majority  of  the 
business  to  us  at  the  higher  rate,  Mr.  Thurstou  would  inevitably 
get  all  that  he  could  possibly  do  by  that  line,  and  the  fact  that 
he  was  willing  to  do  all  he  could  at  that  rate  would  undoubtedly 
enable  him  to  get  the  capital  necessary  to  put  up  additional 
wires  ;  and  so,  step  by  step,  the  difference  between  the  two 
would  disappear,  and  unless  we  came  down  to  the  same  rate  we 
should  ultimately  lose  our  business. 

The  POSTMASTER  GENERAL. — I  have  one  or  two  general  re 
marks  to  make  in  reply  to  Mr.  Orton.  In  my  presentation  of 
the  question  with  regard  to  the  postal  telegraph  I  am  certain  of 
one  thing — that  I  have  not  hada  particle  of  feeling  for  or  against 
any  Company.  I  have  been  looking  solely  to  the  public 
interest.  I  have  made  no  statement  with  a  view  to  injure  any 
Company  or  to  blast  its  prospects  in  the  future,  or  to  interfere 
with  any  just  compensation  that  may  be  awarded  to  it  for  its 
property.  On  the  contrary,  I  have  made  my  statement  only 
after  repeated  solicitations  from  people  of  all  grades  of  society, 
some  rich,  some  poor,  some  men  in  business  and  some  in  social 
life,  some  from  the  East  and  some  from  the  West ;  and  that,  too, 
after  Congress  itself  had  inaugurated  and  carried  out  two  or 
three  laborious  and  able  investigations  of  the  subject. 

The  distinguished  President  of  the  Western  Union  Telegraph 
Company,  who  seems  to  be  so  exceedingly  full  of  information 
on  the  subject,  has  taken  it  upon  himself  to  deal  somewhat  face 
tiously  with  the  report  of  the  Postmaster  General,  and  rather  to 
express  himself  in  terms  of  commiseration  for  the  weakness 
therein  displayed.  He  has  been  especially  severe  upon  the  in 
strument  that  I  have  seen  proper  to  use.  Now,  I  admit  that  I 
have  had  very  few  advantages  in  preparing  this  statement.  I 
have  not  had  one  dollar  of  public  money  at  my  disposal  except 
that  which  I  can  use  by  the  assignment  of  a  single  clerk  in  the 
department  to  gather  information.  I  have  availed  myself  of  the 
services  of  Mr.  Lines,  and  I  think  that,  so  far  as  his  private  char 
acter  is  concerned,  it  will  compare  favorably  with  that  of  an  y 
gentleman  present — I  was  going  to  say  with  that  of  Mr.  Orton 
himself,  but  I  wish  to  avoid  the  appearance  of  anything  offen 
sive.  But  Mr.  Orton  has  seen  proper  to  designate  many  of  my 
statements  as  the  mere  vaporings  of  an  ignoramus,  who  has  been 
permitted  to  shield  himself  behind  the  dignity  of  a  high  officer. 
Now,  in  the  first  place,  I  say  to  this  committee  that,  so  far  as  the 
dignity  of  my  office  is  concerned,  I  do  not  look  to  Mr.  Orton,  or 
to  any  other  man  on  the  face  of  the  earth,  to  protect  it,  or 


139 

to  shield  it,  or  to  guide   me  how  I  shall   treat  it.     In   the 
discharge  of  my   official   duties  I  shall   simply   exercise   my 
proper  discretion   fearlessly  towards   Mr.  Orton  individually, 
or  towards  him  as  President  of  the  Western  Union  Telegraph 
Company.     But  I  desired  to  present  all   the  facts  that  may 
apply  to  this  subject  in  all  its  lights,  and  at  the  same  time 
I  desired  not  only  to  be  just  to  the  people  but  to  be  fair  and 
more    than  just — to   be  liberal  to  the  members  of  those  cor 
porations  who  have  heretofore  enlisted  in  this  business,  and  whose 
capital  has  been  invested  in  the  various  lines.     At  the  same  time 
I  wish  to  be  understood  that  mere  temper  in  this  thing  will  not 
guide  my  action,  as  I  am  sure  it  will  not  guide  yours.     All  that 
we  seek  to  get  at  is  the  truth.     To  do  that  we  want  to  ascertain 
exactly  where  we  stand,  precisely  how  much  property  these 
gentlemen  have,  exactly  how  much  money  they  have  invested  ; 
and  when  that  is  ascertained,  the  public  mind  will  be  prepared 
to  say  whether  the  Government  will  purchase  these  lines  or  not. 
Now,  we  have  listened  to  a  two  hours'  oration  from  Mr.  Orton, 
and  we  have  not  had  from  him  a  solitary  word  going  to  show 
what  the  expenditures  of  the  Western  Union  Telegraph  Com 
pany  have  been,  nothing  but  a  mere  general  declaration,  which 
would  not  be  regarded  in  a  court  of  justice  as  worth  a  button. 
I  appeal  to  any  gentleman  here,  who  is  in  the  habit  of  trying 
cases,  if  he  would  for  a  moment  dream  of  allowing  a  witness  to 
retire  from  a  witness  stand  after  giving  his  own  general  opinions 
and  declarations,  and  studiously  concealing  every  fact.     What  I 
have  asked  for  in  this  report  is  simply  this,  not  that  my  state 
ments  should  be  taken  as  facts :  I  have  presented  them  as  the 
nearest  approximation  to  facts  which  the  means  at  my  command 
enabled  me  to  make,  and  I  ask  the  committee  to  consider  the 
statements  which   I  have  been  enabled  to  present  to  them — 
statements  all  made  in  good  faith — and  then  to  do  what  I  think 
prudent  men  ought  always  to  do  before  engaging  in  any  great 
work  (and  especially  gentlemen  like  yourselves,  acting  in  a  re 
presentative  capacity,  as  members  of  the  American  Congress), 
that  is,  simply  to  appoint  a  commission  of  the  best  men  that  we 
can  designate  in  the  land,  with  ample  power  to  ascertain  pre 
cisely  how   many  miles  of  wire   these  gentlemen  have,  how 
many  poles    they  have,  how  many  batteries    they  have,  how 
much  property  they  have,  precisely  what  amounts  they  have 
expended,  and  then,  in  the  language  of  the  Act  of  1866,  to  de 
termine  what  the  Companies  are  entitled  to  for  their  lines,  pro 
perty  and  effects.     That  is  the   agreement   which   they    have 
made.     That  is  all  that  I  have  asked  for.     I  do  not  ask  you  10 
take  my  statement,  and  to  insist  on  taking  the  property  of  any 
telegraph  Company ;  but  I  have  asked  you  to  appoint  this  com 
mission,  and  in   connection  with  it  to  appoint  the  appraisers, 


140 

throwing  around  them  such  guards  as  you  may  deem  proper 
and  right  for  the  protection  of  the  people  ;  and  when  those 
reports  are  made  to  you,  with  the  facts  reduced  to  figures  as 
accurately  as  the  investigations  of  the  ablest  and  most  impartial 
gentlemen  we  can  obtain  can  arrive  at,  then  I  want  this  com 
mittee  and  Congress  to  determine  whether  the  time  has  come 
when  the  American  people  shall  stand  on  this  question  on  pre 
cisely  the  same  platform  with  every  civilized  people  in  the 
world  ;  and  I  believe  that  every  nation  in  Europe  to-day,  that 
has  a  telegraph  at  all,  has  put  it  under  the  charge  of  its  Govern 
ment.  Even  Canada,  where  that  step  has  not  yet  been  taken, 
has  marched  forward  to  the  establishment  of  a  uniform  rate  of 
compensation,  applying  to  the  whole  extent  of  that  country 
which  is  next  to  our  own  in  extent  on  the  North  American  con 
tinent.  And  the  directors  of  the  Montreal  Company  have 
already  declared  that  on  their  uniform  rate  of  25  cents  a  message 
they  have  had  at  least  an  increase  of  business  amounting  to 
25  per  cent,  in  the  aggregate. 

I  have  only  asked  the  committee  to  avail  themselves  of  all 
proper  means  of  investigation  to  arrive  at  the  facts  as  accurately 
as  possible,  and  then  to  decide  the  question.  I  am  not  willing 
to  take  Mr.  Orton's  mere  generalities,  and  to  allow  him  to  make 
his  statement,  without  making  the  most  careful  scrutiny  into  his 
detailed  statement  of  facts. 

Mr.  NIBLACK. — Is  it  not  true,  also,  that  every  Government  that 
has  taken  charge  of  the  telegraph  business  has  also  taken  charge 
of  the  railroads,  with  the  exception  of  Great  Britain  ? 

The  POSTMASTER  GENERAL.— Canada  has  not. 

Mr.  ORTON. — Canada  has  not  the  Grovernment  telegraph. 

The  POSTMASTER  GENERAL. — No,  it  has  not  the  Govern 
mental  telegraph,  but  Canada  has  but  one  telegraph  line,  and 
that  is  managed  on  the  most  liberal  principles. 

Mr.  SWEET. — Canada  has  two  telegraph  companies. 

The  POSTMASTER  GENERAL. — I  am  not  as  well  informed  on 
that  point  as  the  gentleman,  but  in  these  estimates  I  have  put 
them  on  the  basis  of  Government  expenditure.  You  will 
observe  that  I  make  an  estimate  on  what  these  lines  will  cost 
the  Government  to  duplicate  them.  Of  course  that  means  with 
all  the  advantages  which  the  Government  possesses.  The 
Government  can  run  lines  along  mail  routes.  It  would  have  no 
duty  to  pay  on  the  necessary  importations.  It  would  have  all 
those  advantages  and  also  the  advantages  of  management. 
These  are  the  arguments  that  I  urge  why  Government  should 
avail  itself  of  this  great  work  in  behalf  of  the  interests  of  the 
people. 

Mr.  E.  B.  LINES  said  that/  as  to  Mr.  Chester's  estimate, 
it  was  to  be  borne  in  mind  that  it  was  made  on  the  figures 


141 

given  by  Mr.  Orton  in  his  report  some  years  since,  and 
that  Mr.  Chester  stated  in  his  letter  that  wire  was  the 
most  expensive  item  in  the  cost  of  telegraph  lines,  owing 
to  the  enormous  increase  in  the  cost  of  coal  and  labor  in 
England,  which  rendered  wire  more  than  thirty  per  cent,  higher 
now  than  it  was  six  months  since.  Mr.  Chester's  estimate  was 
on  the  basis  of  the  wire  being  duty  free,  which  would  reduce 
the  cost  some  two  million  dollars. 

Mr.  ORTON  said  he  made  no  point  as  to  the  question  of  duty 
on  wire  beyond  what  he  had  done,  but  he  should  like  Mr.  Lines 
to  explain  how,  in  the  body  of  the  report,  he  had  committed  the 
honorable  Postmaster  General  to  a  statement  of  $11,880,090  as 
the  cost  of  duplicating  the  present  lines  of  telegraph,  when  the 
only  estimate  submitted  in  support  of  that  statement  made  the 
cost  eighteen  and  a  quarter  millions. 

The  POSTMASTER  GENERAL  interposed,  and  said  he  would 
object  to  Mr.  Lines  giving  any  detailed  information  until  some 
detailed  information  was  given  by  the  Western  Union  Telegraph 
Company,  and  he  wanted  it  under  oath  /* 

Mr.  ORTON  replied  that  he  had  had  no  intimation,  either  from 
the  Postmaster  General  or  from  the  committee  that  any  information 
was  desired  which  had  not  been  famished  by  the  Western  Union 
Telegraph  Company.  He  had  responded  with  the  utmost  alacrity 
to  every  request  made  from  the  Post-office  Department  for  infor 
mation  concerning  the  operations  of  the  Western  Union  Tele 
graph  Company, and  with  great  particularity  of  detail,  and  yet  he 
had  not  found  in  the  report  of  the  Postmaster  General  a  single 
item  of  the  statistics  which  he  had  furnished  to  him. 

Mr.  LINES  remarked  that  the  statistics  furnished  by  Mr.  Or 
ton  were  all  included  in  the  report  of  the  Postmaster  General, 
together  with  statistics  from  all  the  other  Companies.  Mr. 
Lines  proceeded  to  quote  from  the  annual  report  of  the 
Western  Union  Telegraph  Company  for  1869,  and  also  from 
the  report  made  to  the  House  of  Representatives  by  Hon.  C.  C. 
Washburne,  of  Wisconsin,  in  order  to  prove  that  the  estimate  in 
the  Postmaster  General's  report  was  not  at  all  below  the  figures 
furnished  by  Mr.  Orton  himself. 

Mr.  ORTON  remarked  that  Hon.  D.  A.  Wells  had  prepared  at 
his  request  a  report  on  the  telegraph  in  this  country  and  in  Eu 
rope,  which  report  had  just  been  put  in  the  hands  of  the  printers, 
and  he  asked  permission  to  file  a  copy  of  it  with  tl^e  committee. 

The  CHAIRMAN. — We  shall  be  very  glad  to  have  it. 

(Adjourned.) 

*  See  Note,  page  142. 


142 


NOTE. — Perhaps  an  apology  is  due  to  the  public  for  having  provoked  a  Cabinet 
Minister  to  temporarily  forget  the  proprieties  of  the  occasion  by  the  exposure  of 
errors  which  he  had  incorporated  into  an  important  official  document.  Respect 
for  the  Committee  and  for  the  office  of  Postmaster  General  of  the  United  States 
restrained  me  at  the  time  from  making  answer  to  the  reflection  upon  my  veracity 
implied  by  the  demand  for  information  "  under  oath."  Neither  by  virtue  of  his 
office,  nor  by  any  authority  conferred  upon  him  by  Congress,  has  the  Postmaster 
General  the  right  to  require  me  to  furnish  information  concerning  the  business 
under  my  charge  ;  yet  what  he  did  ask  for  was  completely  and  correctly  furnished. 
And  I  submit  whether  it  would  not  have  been  more  decorous  to  have  published 
with  his  report  the  information  furnished  concerning  the  operations  of  the  Western 
Union  Company,  exposing  the  errors,  if  any  were  found,  than — after  suppressing 
my  statements,  and  without  attempting  to  reply  to  my  exposure  of  his  errors — to 
insinuate  that  which  he  did  not  directly  charge.  Doubtless,  an  air  of  solemnity 
would  have  been  contributed  to  the  propositions  of  Euclid  if  his  demonstrations  had 
been  supplemented  by  an  affidavit  in  support  of  their  correctness.  But  it  is  not 
probable  that  the  oath  would  have  been  accepted  as  conclusive  if  the  demon 
stration  had  failed  to  convince. 

W.  0. 


[From  the  JOURNAL  OP  THE  TELEGRAPH.] 

THE  POSTMASTER-GENERAL'S  REPORT. 


Tn  our  last  issue  we  reviewed,  at  some  length,  that  portion  of 
the  Postmaster-General's  Beport  relating  to  the  telegraph,  our 
criticisms  being  more  particularly  directed  to  the  erroneous  state 
ments  contained  therein.  It  has  been  our  aim  to  discuss  the 
questions  involved  in  the  Governmental  acquisition  of  the  tele 
graph  in  a  fair  and  candid  spirit,  and  with  puch  intelligence  as 
the  long  experience  and  familiarity  with  the  business  of  tele 
graphing  enables  us  to  employ.  We  have  not  imputed  to  the 
Postmaster-General  any  improper  motives  in  the  presentation  to 
Congress  of  his  singularly  inaccurate  arid  indefensible  statements 
relating  to  the  telegraph.  The  subject  is  too  vast  and  compli 
cated  to  be  understood  by  a  merely  superficial  examination,  such 
as  a  Cabinet  Officer,  burdened  with  the  cares  and  responsibili 
ties  of  an  important  department,  is  able  to  devote  to  it.  A  busi 
ness  involving  the  employment  of  a  capital  of  over  sixty  millions 
of  dollars,  of  ten  thousand  skilled  laborers,  of  six  thousand  sepa 
rate  places  where  it  is  transacted,  and  an  annual  expenditure  of 
over  seven  millions  of  dollars,  cannot  be  comprehended  or 
grasped  in  all  its  details,  except  by  a  long  and  careful  study  of 
the  subject  by  persons  qualified  by  study  and  experience  for  the 
office.  The  mere  fact  that  the  Postmaster-General  estimates  the 
value  of  such  a  business  at  less  than  one  sixth  of  the  capital  re 
presented  in  it — a  capital  which,  for  the  most  part,  has  a  market 
value  of  over  80  per  cent,  of  its  par  value — shows  not  only  that 
his  estimate  of  its  value  is  not  shared  by  that  portion  of  the 
public  who  have  money  to  invest,  but  clearly  indicates  that  he 
has  not  given  the  subject  the  careful  and  intelligent  considera 
tion  which  is  due  to  it.  Regarding  the  cost  of  the  lines  the  Post 
master-General  says : 

"  The  majority  of  lines  in  this  country  have  been  built  very  cheaply.  Their 
entire  cost,  including  patents,  being  probably  much  less  than  $10,000,000.  In 
fact,  the  poles  have  been  erected  in  many  cases  entirely  without  cost  to  the  telegraph 
companies,  by  the  railroads  along  whose  tracks  they  are  built.11 

Suppose  the  railroad  companies  had  not  only  "  erected  "  the 
poles,  but  furnished  them,  as  well  as  the  wires  thereon,  how 
would  this  affect  the  question  of  cost  ?  In  other  words,  what 
bearing  has  the  question  of  who  pays  for  a  thing  upon  the  cost 
of  production  ? 

A  most  striking  commentary  on  the  above  statement  of  cost 


144 

is  presented  in  the  Postmaster-General's  Report,  in  the  only  esti 
mate  for  constructing  a  similar  extent  of  lines  furnished  by  him, 
which  gives  the  cost  at  eighteen  and  a  quarter  millions  of  dollars, 
providing  the  wire  is  imported  free  of  duty.  When  it  is  considered 
that  wire  is  one  of  the  principal  items  of  cost,  and  that  the 
duties  on  it  amount  to  sixtj^-eight  per  cent.,  it  will  be  perceived 
lhat  the  Postmaster-General's  statement  of  cost  is  more  than 
doubled  by  the  only  authority  he  brings  forward  to  establish  it. 
Supposing,  however,  that  it  could  be  shown  that  the  cost  of 
bulking  a  system  of  telegraphs,  equal  to  those  now  in  operation 
in  the  United  States,  would  not  exceed  twenty -five  or  thirty 
millions  of  dollars,  would  this  fact  prove  that  the  Government 
could  acquire  them,  or  would  have  a  right  to  acquire  them  at 
that  sum  ? 

Section  3  of  the  Act  of  Congress,  approved  July  24,  1866, 
upon  which  the  Postmaster-General  relies  for  obtaining  possession 
of  the  telegraphs  now  in  operation  in  this  country,  provides  as 
follows : 

"  That  the  United  States  may,  at  any  time  after  the  expiration  of  five  years 
from  the  date  of  the  passage  of  this  Act,  for  postal,  military,  or  other  purposes, 
purchase  all  the  telegraph  lines,  property  and  effects  of  any  or  all  of  said  com 
panies,  at  an  appraised  value,  to  be  ascertained  by  five  competent,  disinterested 
persons,  two  of  whom  shall  be  selected  by  the  Postmaster-General  of  the  United 
States,  two  by  the  company  interested,  and  one  by  the  four  so  previously  selected." 

Now,  what  is  the  meaning  of  the  word  value  as  applied  to  the 
telegraph  ?  Does  it  mean  the  cost  merely  of  the  poles,  wire, 
machinery,  patents  and  other  property,  or  does  it  include  also 
its  business,  good  will,  ability  to  earn  money,  etc.  ?  The  Post 
master-General  assumes  that  it  means  simply  the  former,  and 
says  : 

"  It  may  be  proper  to  state  that  one  of  the  companies  has  advanced  the  theory 
that  the  Government  should  purchase  not  only  its  telegraph  lines,  property  and 
effects,  but  also  the  good  will  of  its  business,  based  on  present  and  prospective 
profits.  As  it  is  difficult  to  see  how  mere  good  will  can  be  brought  before  the 
appraisers,  under  the  law  as  it  stands,  it  is,  perhaps,  unnecessary  for  me  to  discuss 
at  much  length  the  merits  of  this  claim." 

If  the  Postmaster-General's  definition  of  value,  namely,  that 
it  is  synonymous  with  cost,  is  correct,  we  are  sadly  in  need  of  a 
new  dictionary,  for  all  of  those  hitherto  published  give  an  en 
tirely  different  meaning  to  the  word.  Webster's  definition  of 
value  is  as  follows : 

"  The  property  or  properties  of  a  thing  which  render  it  useful;  or  the  degree  of 
such  property  or  properties;  worth;  utility ;  importance;  rate  or  estimated  worth; 
price  deemed  or  accepted  as  equivalent  to  the  utility  of  anything ;  amount  obtained 
in  exchange  for  a  thing.'" 

It  will  be  perceived  that  Webster,  in  no  instance,  makes  the 
value  of  a  thing  depend  upon  its  cost,  and  we  must  confess  our 
surprise  that  a  gentleman  of  Mr.  Creswell's  well  known  ability 
could  fall  into  so  conspicuous  an  error.  To  illustrate  the  abso- 


145 

lute  dissimilarity  of  the  two  words,  and  the  entire  absence  of  any 
necessary  relation  between  them,  let  as  consider  the  cost  and 
value  of  an  important  invention.  Take,  for  example,  Steams' 
Duplex  Telegraph,  the  cost  of  which  to  the  inventor  was  incon 
siderable,  but  which  is  already  earning  the  Western  Union  Com 
pany  the  interest  on  a  million  dollars  per  annum,  and  the  value 
of  which  is  almost  inestimable.  Or,  on  the  other  hand,  take  the 
Morse  patent,  whose -cost  to  the  company  was  very  great,  but 
which,  having  expired,  is  now  without  any  value  whatever. 

It  seems  scarcely  necessary  to  further  discuss  the  question  of 
the  dissimilarity  between  the  cost  and  value  of  a  thing,  as  it 
must  be  apparent  to  every  reflective  mind,  but  we  will  produce 
one  more  practical  illustration,  on  account  of  its  direct  bearing 
upon  the  case  in  point. 

Mr.  Frank  Ives  Scudamore,  the  Director-General  of  the  Post- 
office  Telegraphs  in  England,  in  his  testimony  before  the  Select 
Committee  on  the  Electric  Telegraph  Bill,  says : 

"  The  sum  that  is  charged  by  the  companies  for  the  construction  of  works  gene 
rally  includes  a  very  large  expenditure  from  first  to  last  in  getting  up  their  plant 
of  all  kinds;  it  includes  the  cost  of  their  leasehold  property,  and  it  includes  the 
cost  of  their  patents,  which  is  very  considerable  in  each  year,  and  it  also  includes 
the  preliminary  expenses  in  getting  bills  before  Parliament ;  it  includes  expense 
of  every  kind ;  it  is  not  simply  the  manufacture  of  the  mere  posts  and  wires." 

Question  by  Mr.  GOSCHEN  : 

"  Would  you  be  able  to  put  in  a  statement  and  analyze  the  two  and  a  half 
millions  of  the  companies  ?  You  are  going  to  buy  the  assets  of  the  companies, 
and  some  of  those  assets  represent  property — that  is  to  say,  posts  and  wire?  and 
instruments — assets  which  exist  at  this  moment;  another  portion  of  it  represents 
no  value  present  at  all ;  that  is  to  say,  a  certain  amount  which  has  been  spent  on 
Parliamentary  proceedings,  patents  which  have  expired,  and  so  forth.  Would  you 
be  able  to  show  what  amount  is  to  be  placed  in  each  of  those  two  classes  ?" 

Answer  by  Mr.  SCUDAMORE  : 

"  I  should  be  very  glad,  indeed,  if  you  would  not  ask  me  to  put  in  any  statement 
of  my  views  as  to  the  value  of  their  property?" 

Question  ly  Mr.  GOSCHEN  : 

"  I  do  not  mean  the  value ;  I  mean  the  cost.  The  capital  accounts  of  the  various 
companies  will  show  what  they  have  done  with  their  capital,  and  it  would  enable 
the  Committee  to  see  what  the  public  are  actually  buying." 

Answer  by  Mr.  SCUDAMORE  : 

"I  am  quite  sure  of  that;  it  would  enable  the  committee  to  see  what  they  would 
buy,  as  far  as  the  expenditure  of  the  companies  is  concerned ;  but  that  is  not  the  only 
sum  involved  in  buying  the  trade  of  a  company.  For  instance,  if  I  may  take  a  very 
low  case  as  an  illustration,  if  you  buy  a  public  house  you  buy  something  more  than  the 
building,  and  the  pots,  and  barrels  and  bser  engines;  you  buy  the  trade  which  the 
man  has  acquired."* 

The  above  quotation  from  Mr.  Scudamore's  testimony  shows- 
the  view  which  the  British  Government  took  of  their  obliga- 

*  Special  Report  from  the  Select  Committee  on  the  Electric  Telegraph  BUI ;  together  with  the 
Minutes  of  Evidence  taken  before  them.  Ordered  by  the  House  of  Commons  to  be  printed,  16th 
July,  1868.  Page  152. 

10 


146 

tions  to  the  telegraph  companies  whose  property  they  proposed 
to  acquire,  and  which  they  did  acquire  by  paying  for  it  a  sum 
equal  to  twenty  years'  profit.  Mr.  Creswell  says,  in  his  recent 
report,  that  the  profit  of  the  telegraph  companies  in  the  United 
States  for  1872,  was  $3,500,000,  and  if  the  statement  is  correct 
the  lines  are  worth,  on  the  basis  of  the  purchase  of  the  English 
lines,  $70,000,000. 

<4But,"  says  Mr.  Creswell,  "  the  manner  in  which  the  British  Government  recently 
acquired  the  telegraphs  cannot  bo  cited  as  a  precedent  for  the  United  States. 
There  was  no  such  previous  agreement  between  Her  Majesty's  Government  and 
the  companies  of  the  United  Kingdom  as  is  contained  in  our  Act  of  1866." 

The  above  sentence  is  a  most  remarkable  one,  emanating  as  it 
does  from  a  high  officer  of  the  Government,  and  taken  in  con 
nection  with  the  depreciatory  manner  in  which  the  telegraph 
property  of  the  country  is  alluded  to.  Let  us  analyze  it  and  see 
what  it  actually  means.  It  is  not  pretended  that  the  British 
Government  paid  too  much  for  the  property  which  they  pur 
chased,  and  which  was  seven  times  as  much  as  Mr.  Creswell  es 
timates  a  similar  property  to  be  worth  here,  but  simply  that 
there  was  no  such  agreement  between  the  British  Government 
and  the  telegraph  companies  as  exists  by  virtue  of  the  accept 
ance  by  the  companies  in  the  United  States  of  the  Act  of  1866. 
Are  we  to  infer  by  this  that,  if  the  British  Government  had  pos 
sessed  such  a  right  as  the  Act  of  1866  gives  to  our  Government, 
it  would  have  paid  the  telegraph  companies  less  than  their 
property  is  worth  ?  Or  are  we  to  infer  that  our  Government  is 
less  fair  in  its  dealings  with  its  own  citizens  than  the  British 
Government  is  with  its  subjects?  Either  the  one  conclusion  or 
the  other  must  inevitably,  be  drawn  from  the  premises  laid  down. 
We  are  unwilling  however  to  believe  that  our  Government  is 
disposed  to  treat  its  citizens  in  so  unfair  a  manner,  or  that  Mr. 
Creswell  would  knowingly  recommend  it.  On  the  contrary,  we 
incline  to  believe  that  this  view  of  the  case  was  conceived  by 
some  assistant  of  the  Postmaster-General,  whose  desire  to  acquire 
the  property  for  the  department  at  a  cheap  rate  overcame  his 
discretion  or  notions  of  equity. 

But  admitting,  for  the  purpose  of  illustration,  the  improbable 
hypothesis  that  our  Government  is  capable  of  taking  advantage 
of  a  legal  right  to  force  a  portion  of  its  own  citizens  to  sacrifice 
a  large  and  important  property,  regardless  of  all  questions  of 
justice  or  equity  involved  in  the  case,  we  deny  that  the  United 
States  has  acquired  any  such  right  over  the  property  of  the  tele 
graph  companies  which  accepted  the  conditions  prescribed  in  the 
Act  of  July  24th,  1866.  This  Act,  so  far  as  it  relates  to  the  ac 
quisition  of  the  property,  simply  provides  that  the  United 
States  may  purchase  it  at  an  appraised  value,  to  be  ascertained 
by  five  competent  disinterested  persons. 


147 

Now,  according  to  Webster's  definition  of  value,  the  value  of 
the  telegraphs  cannot  ba  less  than  the  market  price,  because  that 
can  always  be  "  obtained  in  exchange  for  them  ;"  nor  can  it  be 
less  than  "  the  price  deemed  equivalent  to  their  worth,  utility, 
importance  or  usefulness;"  and  the  British  Government,  the 
only  Government  which  has  ever  purchased  an  extensive  -tele 
graph  system,  wholly  constructed  by  private  enterprise,  has 
already  established  the  precedent  that  the  value  of  the  lines  and 
property  of  a  telegraph  company  is  equal  to  the  sum  of  twenty 
years'  net  profits,  which  would  make  the  value  of  the  telegraphs 
in  the  United  States  at  least  $70,000,000.  This  sum,  however, 
is  but  the  commencement  of  the  amount  which  the  Government, 
will  be  obliged  to  expend  in  the  event  of  its  going  into  the  busi 
ness  of  telegraphing. 

If  the  Postmaster-General's  estimate  of  the  increase  in  the 
telegraphic  correspondence  of  the  country,  under  the  proposed 
average  reduction  of  the  tariff  to  33J  cents  per  message,  is  cor-, 
rect,  and  the  number  of  messages  annually  transmitted  is  in 
creased  from  15,000,000  to  30,000,000,  the  satisfactory  perform 
ance  of  this  increased  traffic  will  require  a  proportionate  increase 
in  facilities,  and,  while  these,  in  a  great  measure,  may  be 
supplied  by  the  introduction  of  the  duplex  apparatus,  there 
would  still  exist  the  necessity  for  the  expenditure  of  a  vast  sum 
of  money  in  the  construction  of  additional  lines. 

The  transmission  of  telegrams  is  totally  unlike  the  trans 
mission  of  letters;  an  increase  in  the  number  of  letters  is  easily 
and  readily  provided  for  by  the  purchase  or  manufacture  of  a 
few  extra  bags,  but  the  increase  in  the  number  of  messages 
transmitted  over  the  wires  can  only  be  provided  for  by  propor 
tionately  increasing  the  number  of  circuits  and  operators  re 
quired  for  their  transmission. 


THE  GOVERNMENT  AND  THE  TELEGRAPH. 


CORRESPONDENCE 

BETWEEN 

HON.  JOSEPH    MEDILL 

AND  THE  PRESIDENT  OP 

The  Western  Union  Telegraph  Company, 


EXECUTIVE  OFFICE, 

^Itti0w  ®ekgmiJlt 

NEW  YORK,  November  6,  1872. 
HON.  JOSEPH  MEDILL, 

Chicago,  III. 

MY  DEAR  SIR — I  found  it  impossible  to  keep  the  promise 
made  you  to  call  at  your  office  before  leaving,  on  account  of 
the  pressure  of  business  which  I  could  not  postpone,  and  which 
occupied  every  moment  of  my  time.  My  desire  to  have  a 
further  conference  with  you  was  increased  by  information  re 
ceived  on  the  morning  after  our  interview,  to  the  effect  that  you 
favored  the  taking  of  the  telegraph  by  the  Government.  I 
regret  that  any  feeling  of  delicacy  restrained  you  from  the  frank 
and  fall  expression  of  your  opinions  last  Wednesday  evening.  My 
opinions  on  this  question  have  been  formed  after  much  study  and 
as  careful  a  consideration  of  all  the  elements  involved  as  I  am 
capable  of  giving.  But  I  am  always  better  pleased  to  listen  to 
the  opinions  of  others  than  to  express  my  own,  and  I  am  quite 
sure  that,  with  your  ability,  and  your  habit  of  reasoning  your 
way  to  conclusions,  I  should  have  listened  to  your  views  with 
more  than  ordinary  interest. 

The  progress  of  the  American  people  is  the  wonder  of  the 
world.  National  prosperity  is  but  the  aggregate  of  individual 
success.  The  prosperity  of  the  average  citizen  of  the  United 
States  is  not  the  result  of  any  aid  which  the  Government  has 
contributed.  Our  Government  does  most  and  best  for  its 
citizens  when  it  leaves  them  free  to  embark  in  lawful  enterprises, 
whose  success  depends  solely  upon  the  zeal,  energy  and 
fidelity  with  which  they  are  prosecuted.  American  genius,  en 
terprise  and  capital  will  provide  for  all  the  wants  of  our  people, 
and  the  question  of  cost  loses  its  importance  in  the  presence  of 
the  constantly  increasing  ability  to  pay. 

It  has  not  been  considered  heretofore  one  of  the  functions  of 
our  Government  to  make  any  necessary  cheap.  On  the  other 
hand,  it  has  been  the  uniform  policy  for  thirty  years  to  make 
many  products  artificially  dear.  If  it  be  right  for  the  Govern 
ment  to  require  us  to  pay  sixty  per  cent,  more  for  telegraph 
wire  than  it  would  cost  without  Governmental  interference,  in 
order  to  insure  a  profit  to  American  manufacturers  of  wire,  is  it 
fair  to  ask  us  to  perform  telegraphic  service  at  the  rates  charged 
where  wire  and  other  material  costs  a  third  less,  and  labor  less 
than  half?  If  the  policy  of  protecting  the  skilled  labor  employ 
ed  in  every  department  of  manufactures  from  the  competition  of 


152 

the  cheaper  labor  of  Europe  be  correct,  what  ground  is  there  for 
complaint  if  telegraphic  service,  which  requires  special  educa 
tion  and  the  greatest  skill,  costs  more  in  this  country  than  in 
England? 

The  capital  invested  in  the  telegraph  business  in  the  United 
States  during  the  last  ten  years  has  paid  less  on  the  average  than 
that  invested  either  in  railroads,  in  mining,  or  in  almost  any 
kind  of  manufactures.  Yet  its  development  has  fairly  kept 
pace  with  the  growth  of  the  country  without  having  cost  the 
Government  a  dollar,  while  in  Europe,  under  Government  con 
trol,  the  annual  deficit,  provided  by  taxation,  has  been  from  one 
to  two  millions. 

I  claim  this  proposition  as  fundamental  :  That  whenever  our 
Government  undertakes  to  supply  any  public  want,  merely  for 
the  sake  ol  making  the  cost  less  than  the  price  charged  by  indi 
viduals  and  corporations,  it  should  begin  with  what  is  most 
essential  to  the  largest  number.  Is  it  just  to  impose  taxes  upon 
all  the  people  in  order  to  reduce  the  cost  of  messages  to  the  few 
who  have  occasion  to  send  them  until  after  provision  has  been 
made  for  supplying  food,  and  clothing,  and  fuel  at  the  lowest 
possible  rates  ? 

Again,  many  more  people  travel  on  railways  every  year 
than  send  messages  by  telegraph.  If,  then,  the  Government 
should  take  the  telegraph,  why  not  the  rail  ways?  And  when  it 
has  taken  these,  why  should  it  not  embark  in  mining  coal  and 
metals  and  in  manufactures  ?  In  short,  when  the  door  is  once 
opened,  and  our  Government,  instead  of  being  merely  a  protect 
ing  power,  becomes  an  aggressive  enterprise,  at  what  point 
will  it  stop  ? 

Personally,  I  have  very  little  at  stake.  But  I  sincerely  be 
lieve  that  it  will  be  an  unfortunate  day  for  the  country  when 
our  Government  enters  upon  a  competition  with  the  enterprise 
of  its  citizens  by  embarking  in  any  department  of  business. 
Patronage  is  always  power,  and  in  the  judgment  of  many 
thoughtful  men  this  source  of  power  in  our  Government  is  al 
ready  too  great. 

Have  you  reflected  carefully  upon  the  control  which  the  Gov 
ernment  would  have  over  the  press  in  the  event  of  its  taking  the 
telegraph  ?  The  telegraph  company  seeks  only  to  make  money. 
The  press  are  among  its  best  customers.  There  is,  therefore, 
small  danger  that  it  will  pursue  a  policy  which  would  dissatisfy 
these  customers.  The  Government,  on  the  other  hand,  takes  no 
thought  of  profit.  In  an  exciting  political  contest,  like  that 
through  which  we  have  been  passing  during  the  last  four 
months,  if  the  telegraph  belonged  to  the  Government  would  it 
not  be  used  by  the  party  in  possession  for  its  extension  and  the 
election  of  its  friends  ?  Would  not  that  portion  of  the  press 


153 

which  supports  the  party  in  power  receive  valuable  faw.s  at 
the  expense  of  the  portion  opposed  ? 

I  submit  these  few  suggestions  for  jour  consideration.  They 
are  but  a  small  portion  of  the  reasons  which  induce  me  to  op 
pose  the  taking  of  the  telegraph  by  the  Government.  I  am  not  so 
unreasonable  as  to  expect  you  to  take  time  to  discuss  the  sub 
ject  with  me,  and  I  submit  them  only  because  of  my  respect  for 
your  opinions  and  my  confidence  in  your  judgment. 

On  the  occasion  of  my  next  visit  to  your  city  I  will  endeavor 
to  redeem  the  promise  made  at  the  last,  and  then,  perhaps,  we 
may  resume  the  subject. 

I  am,  yours  very  truly, 

WILLIAM  ORTOK 


MAYOR'S  OFFICE,          ) 
CHICAGO,  December  17$,  1872.  j 

HON.  WILLIAM  ORTON, 

New  York. 

MY  DEAR  SIR — Believe  me  that  my  long  delay  in  answering 
your  favor  of  the  6th  ult.  must  not  be  ascribed  to  negligence  or 
disrespect,  but  solely  to  want  of  time.  I  have  been  trying  to 
spare  enough  to  make  such  a  reply  as  the  importance  of  the 
subject  and  my  high  respect  for  yourself  merits. 

Whether  what  I  have  to  say  will  be  connected  or  disjointed 
will  depend  upon  the  "  breaks  "  of  the  circuit  of  thought  and 
interruptions  during  its  composition.  I  have  not  the  aid  of  a 
stenographer  to  rapidly  jot  down  my  views,  but  must  slowly 
long-hand  them  between  other  engagements  and  duties.  With 
this  preface  I  proceed  ta  reply  to  your  very  lucid  and  able  letter 
arguing  the  negative  of  the  proposition. 

Your  information  that  I  favor  the  taking  of  the  telegraph  by 
Government  is  correct  to  this  extent,  that  I  deem  it  only  a  ques 
tion  of  time  when  it  must  assume  that  control.  "  If  the 
Government  should  take  the  telegraph  why  not  the  railways?" 
you  ask.  I  reply,  it  will  have  to  do  that  sooner  or  later.  It 
may  be  a  generation  hence  before  it  is  done,  but  eventually  the 
patience  and  endurance  of  the  people  with  railway  monopoly 
and  extortion  will  wear  out,  and  the  Government  will  be  order 
ed  by  them  to  regulate  the  charges  of  these  corporations  or  to  take 
possession  of  them  and  operate  them.  But  as  the  capital  in 
vested  in  the  railroads  is  200  times  greater  than  that  invested  in 
the  telegraph,  it  will  be  proportionately  more  costly  to  purchase 
and  difficult  to  manage  them  ;  therefore,  the  public  will  submit 
to  imposition  and  plunder  a  long  time  before  venturing  to  pur 
chase  them  and  undertake  their  management ;  and  it  may  not 
be  done  in  your  day  or  mine.  But  the  assumption  of  the  tele 
graph  would  be  but  a  small  matter  in  point  of  cost.  A  month 
or  six  weeks7  surplus  revenue,  now  devoted  to  the  buying 
of  bonds,  would  pay  the  expense  of  building  as  many  miles  of 
wire  as  now  exists  in  the  whole  Union — so  that  the  question  of 
cost  is  not  a  very  serious  matter;  and  there  are  no  legal 
obstructions  in  the  way,  as  the  Act  of  Congress  passed  in  1866 
contemplating  the  acquisition  of  the  telegraph  by  the  Govern 
ment,  after  a  stated  day,  was  accepted  by  your  Company  as 
well  as  others. 

To  my  mind  all  the  points  you  make  against  Goverment  con 
trol  of  the  telegraph  apply  with  equal  or  greater  force  against 


155 

the  Government  control  of  the  mail  3.  If  it  is  proper  and  ex 
pedient  for  the  Government  to  manage  the  latter  it  is  equally 
so  to  manage  "the  former.  Private  enterprise  has  much  more  to 
complain  of  in  the  case  of  the  mails  than  of  the  telegraph.  The 
Express  Companies  can  urge  all  your  reasons,  and  many  in 
addition,  against  the  Government  keeping  the  postal  business 
out  of  their  hands  and  depriving  them  of  large  profits.  The 
enormous  mail  business,  which  now  costs  the  people  less  than 
$28,000,000  per  annum,  if  left  to  the  uncontrolled  discretion 
of  the  Express  Companies,  would  be  reduced  three  fourths 
in  quantity  by  high  charges,  and  the  gross  receipts  therefor 
perhaps  doubled.  The  smallest  package,  weighing  less  than  a 
newspaper,  sent  by  express,  costs  its  sender  fifty  times  as  much 
as  the  Government  charges  for  the  same  weight  of  newspaper, 
or  other  mailable  matter,  for  the  same  distance.  It  would  be  a 
national  calamity  to  let  the  postal  service  fall  into  the  hands  of 
"  private  enterprises,"  i.  e.,  Express  Companies,  who  would 
manage  it  with  an  eye  single  to  stockholders'  profit.  We  should 
then  have  as  many  rates  of  postage,  and  as  exorbitant  ones,  as 
we  now  have  on  express  packages.  After  their  experience 
of  the  blessings  of  cheap  and  uniform  Government  postal  service, 
the  people  would  not  tolerate  the  oppression  of  private  monopoly 
for  a  single  month.  You  refer  to  the  comparatively  few  persons 
who  use  the  wires  as  a  reason  against  taxing  the  many  in  order 
to  furnish  cheap  telegraphy  to  that  few.  But  is  it  safe  to  assume 
that  if  the  Government  should  greatly  reduce  existing  tolls  a 
serious  deficiency  would  result,  to  be  made  good  out  of  the 
National  Treasury.  I  think  not.  The  increase  of  business 
would  keep  pace  with  reduction  of  charges,  until  exceedingly 
low  rates  were  reached.  Where  one  man  will  pay  a  dollar 
for  a  ten  word  despatch,  ten  men  would  pay  a  cent  a  word  for 
messages  of  all  lengths,  some  of  them  containing  perhaps  a  hun 
dred  words.  Few  persona  now  send  despatches  unless  they 
have  urgent  business,  on  account  of  the  high  tariff  imposed. 
But  lower  the  price  sufficiently,  and  the  number  of  messages 
and  words  offered  would  be  limited  only  by  the  capacity  of  the 
wires  to  transmit  them.  This  is  no  random  guess  work  or  mere 
opinion  of  mine,  but  is  proven  by  experience  in  Great  Britain, 
where  a  moderate  decrease  of  tolls  caused  an  immense  expansion 
of  business.  You  and  I  remember  when  the  Government 
charged  twenty -five  cents  postage  on  a  letter ;  and  we  also  re 
member  how  few  were  sent.  When  it  was  proposed  to  reduce 
the  postage  to  ten  cents  there  was  a  loud  outcry  against  it.  It 
was  claimed  that  the  reduction  would  enure  only  to  the  benefit 
of  merchants,  bankers  and  speculators,  and  cause  a  great  defi 
ciency  of  revenue  to  be  made  up  by  taxing  the  poor  man's 
coffee  and  clothing.  But  the  reduction  actually  increased  the 


156 

revenue  and  diminished  the  annual   deficiency.      Again  and 
again  Congress  cut  down  the  postal  tariff  until  it  was  but  three 
cents  on  a  letter  for  any  distance,  one  or  two  cents  on  a  circular, 
and  one  fourth  of  a  cent  on  a  newspaper  to  a  regular  subscriber ! 
and  still  the  service  is  self-supporting ;  the  reported  deficiency 
being  caused  by  the  franked  and  free  matter,  and  subsidies  paicl 
to  ocean  steamers.    Like  causes  produce  like  effects,  as  the  Gov 
ernment  would  seek  no  profit,  but  merely  recompense  ;  approxi 
mating  to  cost,  it  might  safely  raze  existing  tolls  to  rates  as  com 
paratively  cheap  as  postage  on  letters,  and   thus  popularize  this 
lightning  disseminator  of  thought  and  intelligence,  and  remove 
forever  the  sneer  of  thoughtless  persons,  that  the  telegraph  is 
patronized  only  by  bankers,  brokers,  produce  dealers,  stock 
gamblers,  detectives  and  politicians.   I  claim,  as  a  truth  of  political 
economy,  that  the  consumption  of  whatever  is  desirable  is  always 
in  proportion  to  its  cost.  Make  a  desirable  thing  cheap  enough  and 
there  is  no  limit  to  the  demand  for  it.  Telegraphing  would  furnish 
no  exception  to  the  rule.    What  you  state  concerning  the  ill  pay 
ing  character  of  telegraph  stock  rather  surprises  me.     I  was 
laboring  under  the  common  impression  that  not  10  per  cent,  of 
the  market  price  of  the  Western  Union  Telegraph  stock  was  ever 
subscribed  and  paid  in  cash  by  the  stockholders ;  but  that  90  per 
cent,  of  its  present  stock  and  value  are  the  product  of  undivided 
earnings,  and  issues  of  "  watered  "  shares ;  that,  as  a  matter  of 
fact,  the  public  have  furnished  nine  tenths  of  the  capital  in  ad 
dition  to  the  cash  dividends  and  cost  of  mai  ten  nance  and  opera 
tion.     If  I  am  mistaken  in   this  opinion  the  whole  public  are 
also  mistaken.     But  as  the  company  has  never  published  an 
official  statement,  setting  forth  the  actual  facts,  the  public  will 
be  apt  to  adhere  to  its  present  opinion  until  they  do.     You  say 
"it  has  not  been  considered  heretofore  one  of  the  functions  of 
our  Government  to  make  any  necessary  cheap."     I  have  just 
specified  a  most  notable  exception  in  the  postal  service.     You 
also  remark,  "  on  the  other  hand,  it  has  been  the  uniform  policy 
"  for  thirty  years,  to  make  many  products  artificially  dear."     Is 
there  not  a  slight  inaccuracy  in  this  statement  ?    As  I  recollect, 
the  policy  of  the  Government,  from  1846  to  1861,  was  just  the 
reverse  of  that  making  products  artificially  dear ;  and  the  annual 
repeal  of  Federal  taxes  since  1867  convinces  me  that  it  is  not  the 
present  policy  of  the  Government  to  make  products  artificially 
dear  by  maintaining  high  taxes  and  imports.     You  lay  down  a 
proposition  as  fundamental,  in  regard  to  the  duty  of  the  Govern 
ment,  in  leaving  the  supply  of  wants  to  private  competition. 
I  fully  subscribe  to  the   general  principle;  but  I  regard  the 
telegraph  system  as  an  exception.     You   admit  that  a  the  tele 
graph  company  seeks  only  to  make  money,"  which  is  the  sole 
object  of  all  pecuniary  corporations. 


157 

The  present  telegraph  system  is  practically  a  monopoly.  Com 
petition,  such  as  will  benefit  the  people,  is  out  of  the  question. 
The  Western  Union  has  established  itself  beyond  the  reach  of 
competition.     It  can  crush  out,  absorb  or  control  all  rivals,  and 
exact  its  own  terms  from  the  public ;  and  this  it  does.     The 
supposed  competition  of  the  other  companies  is  little  more  than 
a  myth,  so  far  as  cheapening  tolls  is  concerned.     A  monopoly 
of  a  business  is  similar  in  effect  to  a  "  corner"  on  a  stock  or  pro 
duct,  and  places  the  public  at  the  mercy  of  the  corporation 
enjoying  it.     The  rule  of  such  a  corporation  is  to  perform  the 
least  service  for  the  most  money,  because  profit  and  not  public 
good  is  the  actuating  motive  of  the  share  owners  and  managers 
In  the  ordinary  avocations  of  life  competition  regulates  prices 
and  reduces  them  to  the  proper  relative  level,  and  Government 
interference  is    not   needed  ;    but  common    carriers,   millers 
bakers,  market  men  and  others  have  had  to  be  regulated  and 
controlled  by  the  Government  in  order  to  protect  the  public 
against  their  rapacity  and  extortion.     There  should  be  allowed 
no  monopoly  or  combinations  of  private  parties  to  speculate  on 
education  or   the   diffusion   of  intelligence.     Whatever  makes 
education  dear,  or  obstructs  the  spread  of  knowledge,  promotes 
ignorance,  and  injures  the  moral  and  intellectual  health  of  the 
body  politic.  Knowledge  is  power,  and  creates  wealth.  Ignorance 
is  weakness,  and  its  progeny  are  vice  and  poverty.     The  public 
schools  are  maintained  at  the  expense  of  the  tax-payers,  whether 
they  have  children  to  send  to  school  or  not.     Were  education 
left  to  private  enterprise  the  rich  men's  children  would  mono 
polize  it.     So,   if  the   diffusion   of  intelligence  by   mail    was 
surrendered  to  the  express  companies,  it  would  soon  become  a 
luxury  of  the  rich  and  a  burden  even  on  the  business  classes, 
while  the  common  people  would  be  excluded  from  its  enjoy 
ment.     The  telegraph  is  a  quicker  method  of  sending  the  mails  ; 
a  method  which  annihilates  time  and  distance,  and,  with  the 
cooperation  of  the  press,  "  makes  all  men  kin."    It  is  the  noblest 
of  all  human  inventions,  and,  while  it  is  a  common  carrier,  it 
carries  nothing  more  material  than  thought.     The  lightest  of 
tolls  should  be  charged  for  its  labors,  for  it  is  one  of  the  great 
educational  instrumentalities  of  the  nation  and  world.     Its  ser 
vices  should  be  as  nearly  free  to  the  whole  people  as  possible. 
The  greatest  of  all  Government  blunders  is  a  tax  on  information, 
which  is  like  obstructing  the  vision  and  hearing  of  the  natural 
body.     How  cheap  the   telegraph   could   be   operated   by  the 
Government  cannot  be  known  until  tried. 

The  new  "  duplex  system"  of  transmission  on  a  wire  both 
ways  at  the  same  time,  and  other  remarkable  improvements, 
would  enable  the  Government  to  transmit  messages  without 
loss,  at  rates  which  would  surprise  the  country,  and  speedily 


158 

multiply  the  business  manifold.  If  I  were  fixing  the  tolls  at 
the  outset  they  would  be  put  at  one  cent  per  word,  for  all  dis 
tances  in  the  United  States,  with  a  liberal  discount  for  the  press 
— so  liberal  that  the  daily  papers  could  afford  to  take  all  the 
despatches  their  space  would  accommodate.  By  pursuing  this 
policy  benefits  would  be  conferred  on  the  whole  people  to  an 
extent  "  not  dreamt  of  in  your  philosophy." 

From  these  observations  you  perceive  that  I  hold  the  telegraph 
properly  belongs  to  the  educational  and  postal  systems  of  the 
country,  and  that  its  mission  and  purpose  are  the  diffusion  of 
thoughts,  ideas  and  information  among  the  people  instantaneously; 
hence,  that  a  private  corporation  should  not  be  permitted  to 
monopolize  it  for  the  purpose  of  money  making  and  stock 
gambling.  Instead  of  being  a  corporate  monopoly  it  should  be 
owned  by  the  whole  people  and  managed  for  their  greatest 
benefit,  and  its  use  made  relatively  as  cheap  as  the  postal 
service. 

You  speak  of  the  possible  abuses  which  the  Government 
might  practise  to  promote  party  ends.  I  have  no  fears  of  that. 
An  administration  which  would  make  use  of  private  informa 
tion  passing  on  the  wires  would  quickly  be  removed  from 
power.  The  people  are  in  more  danger  now,  in  that  regard, 
than  they  would  be  if  the  wires  were  an  adjunct  of  the  Post- 
office  Department.  I  hear  of  no  complaints  against  the  British 
Government  on  this  score. 

You  ask  me  if  I  have  reflected  carefully  upon  the  control 
which  our  Government  would  have  over  the  press  in  the  event 
of  its  taking  the  telegraph.  In  my  opinion  it  has  nothing  to 
apprehend.  The  press,  of  all  agencies,  is  best  able  to  take  care 
of  itself;  any  discrimination  <T  favoritism  would  be  sure  to  be 
seen,  and  a  "howl"  raised  about  it  instanter.  The  opposition 
politicians  would  desire  no  better  issue  with  which  to  go  before 
the  people.  How  long  would  a  Postmaster  General  remain  in 
office  if  found  dealing  harshly  or  unfairly  with  the  press?  Con 
gressmen  would  enact  the  very  cheapest  possible  rates  to  the 
press,  in  order  to  have  the  proceedings  of  Congress  fully 
reported.  The  influence  of  the  State  Legislatures  would  be  in 
the  same  direction,  for  the  same  reason. 

You  speak  of  the  increase  of  patronage  the  telegraph  would 
give  the  Government,  which  you  deem  dangerous.  I  do  not 
partake  of  these  fears.  A  service  which  you  admit  "  requires 
special  education  and  the  greatest  of  skill "  could  hardly  be 
connected  with  patronage.  The  present  force  of  operators  and 
experts  would  of  necessity  be  taken  into  the  postal  telegraph 
service,  with  yourself,  perhaps,  as  Director-in-Chief.  Changes 
could  only  be  made  for  cause,  find  appointments  upon  qualifica 
tion.  Party  politics  would  cut  but  an  insignificant  figure  in  the 


159 

matter.  Novices  could  not  be  placed  in  charge  of  instruments 
or  wires.  What  took  place  in  England  would  happen  here. 
The  civil  service  system  is  bound  to  be  established  in  this 
county.  The  popular  demand  is  in  that  direction,  and  will 
never  rest  satisfied  until  merit  and  qualifications  are  the  test  of 
fitness  for  administrative  office,  and  not  partisan  "  bumming  " 
and  ballot  box  stuffing. 

I  have  written  thus  freely  upon  your  invitation,  and  it  is  the 
first  time  I  have  ventured  to  put  any  thoughts  on  the  subject 
upon  paper.  It  is  not  strange  that  we  should  come  to  a  diamet 
rically  opposite  conclusion,  and  yet  each  be  perfectly  sincere  in 
his  views,  when  our  respective  stand-points  of  observation  are 
considered.  You  remember  how  the  slaveholders  and  aboli 
tionists  differed  in  their  estimate  of  the  "  peculiar  institution," 
but  you  and  I  will  avoid  their  mistake,  and  not  quarrel  over  our 
difference  of  opinion.  It  would  give  me  great  pleasure  to  canvass 
the  merits  of  the  question  at  issue  with  you  some  evening  over 
a  fragrant  Havana.  I  much  prefer  the  dialogue  style  of  argu 
ment,  and  it  is  quite  possible  that  a  free  exchange  of  views 
would  result  in  a  radical  change  of  my  notions  on  the  subject, 
and  in  a  conversion  to  your  views. 

Very  truly  yours, 

JOSEPH  MEDILL. 


EXECUTIVE  OFFICE, 

Union  f  tlegrHpIj  Compang, 
NEW  YORK,  Dec.  30,  1872. 
HON.  JOSEPH  MEDILL, 

Chicago,  111. 

MY  DEAE  SIR — Your  communication  of  December  17th,  re 
plying  to  mine  of  November  6th,  reached  me  last  week. 

It  is  in  the  main  one  of  the  fairest,  as  it  is  the  ablest  of  the 
statements  made  in  favor  of  the  assumption  and  operation 
of  the  telegraph  by  the  Government  that  have  come  under  mv 
notice.  A  complete  and  fitting  reply  to  all  your  points  cannot 
be  made  within  the  limited  time  I  am  now  able  to  devote  to 
it,  and  I  shall,  therefore,  content  myself  for  the  present  with 
the  consideration  only  of  those  which  I  deem  most  important. 

The  statement  which  I  had  the  honor  to  make  on  this  subject 
recently  before  the  Committee  on  Appropriations  of  the  House 
of  Eepresentatives,  together  with  a  more  carefully  prepared 
paper  by  Hon.  David  A.  Wells,  will  be  printed  in  a  few  days, 
when  copies  will  be  sent  you.  They  will  contain — and  espe 
cially  the  latter — so  full  and  comprehensive  a  statement  of 
facts  concerning  the  operation  of  the  telegraph  in  Europe  and 
the  United  States,  and  of  conclusions  which  the  facts  establish, 
that  it  seems  unnecessary  for  me  to  go  over  in  this  letter  the 
whole  ground  covered  by  them. 

Your  answer  to  my  inquiry  whether  the  Government  should 
not  take  the  railways  as  well  as  the  telegraph — that  u  it  will 
have  to  do  that  sooner  or  later  " — is  evidence  that  behind  the 
question  relating  to  the  telegraph  there  is  a  fundamental  differ 
ence  in  our  views  concerning  the  objects  for  which  our  Govern 
ment  was  established,  and  the  best  modes  of  accomplishing  them. 
Those  purposes  are  set  forth  in  the  preamble  to  the  Constitu 
tion  of  the  United  States — "to  form  a  more  perfect  union, 
establish  justice,  insure  domestic  tranquility,  provide  for  the 
common  defence,  promote  the  general  welfare,  and  secure  the 
blessings  of  liberty  to  ourselves  and  our  posterity." 

You  seem  to  think  that,  in  order  to  accomplish  these, 
the  Federal  Government  is  to  become  a  vast  commercial 
enterprise ;  that  one  of  its  proper  functions  is  to  provide  the 
people  with  whatever  is  deemed  best  for  their  welfare  at  the 
public  expense,  provided  a  larger  supply  can  thus  be  furnished 
at  a  less  cost  per  capita  than  would  result  if  such  supply 
depended  upon  private  capital  managed  by  private  enterprise. 
Perhaps  your  view  is  the  correct  one,  but  it  differs  widely  from 


161 

mine.  I  have  supposed  that  the  "  blessings  of  liberty  "  were  to 
be  secured,  and  the  "  general  welfare  promoted,"  in  the  first 
instance,  by  the  protection  of  every  citizen  in  person  and  property 
while  in  the  pursuit  of  all  lawful  avocations.  This  protection 
the  people  collectively  have  guaranteed  to  each  individual. 
Your  scheme  of  government  appears  to  be  a  grand  Fourier 
phalanx — a  sort  of  Oneida  community  on  an  immense  scale — 
whose  members  are  to  receive — not  the  result  of  their  separate 
skill  and  labor — but  are  to  be  beneficiaries  in  a  pro  rata  distri 
bution  of  the  net  profits  of  the  joint  operations.  It  is  not  on  this 
plan  that  the  successes  of  the  American  people  have  been  thus  far 
achieved.  While  the  paternal  governments  of  the  Old  World 
have  been  extending  with  one  hand  their  illusive  benefits,  with 
the  other  they  have  been  heaping  up  burdens  upon  the  people, 
until  debt  and  taxation  are  fast  ripening  into  universal  discon 
tent.  Meanwhile,  the  people  of  the  United  States  have  abolished 
"the  peculiar  institution"  of  which  you  speak,  crushed  the 
rebellion  which  slavery  invoked,  and  in  their  private  capacity, 
and  almost  wholly  with  private  capital,  have  gridironed  a  con 
tinent  with  railways  and  carried  the  telegraph  to  the  extremes 
of  civilization.  Yet,  in  view  of  these  important  facts,  you 
appeal  to  the  precedents  established  by  European  governments, 
and  appear  to  assume  that  they  can  be  followed  here  without 
being  accompanied  by  the  evils  which  have  invariably  attended 
them  elsewhere. 

You  would  have  the  Government  provide  the  telegraph  be 
fore  railways,  apparently  not  because  of  any  natural  order  of 
precedence,  but  because  it  can  get  into  the  business  at  smaller 
cost  in  the  one  case  than  in  the  other.  You  say:  "  The  telegraph 
properly  belongs  to  the  educational  and  postal  systems  of  the 
country,  and  that  its  mission  and  purposes  are  the  diffusion  of 
thoughts,  ideas  and  information  among  the  people  instantane 
ously." 

I  do  not  mean  to  deny  that  the  instantaneous  "  diffusion  of 
thoughts,  ideas  and  information  among  the  people"  is  a  result 
greatly  to  be  desired.  It  has  not  before  occurred  to  me,  how 
ever,  that  this  is  one  of  the  functions  of  our  Government.  But 
if  it  be,  are  there  not  other  provisions  to  be  made  first  ? 

The  real  basis  on  which  rests  the  claim  that  the  telegraph 
should  be  put  in  charge  of  the  Government,  is,  that  it  will 
cheapen  the  cost.  But  before  there  can  be  much  use  for  the 
telegraph,  people  must  be  able  to  read  and  write  ;  and  you  will 
be  surprised,  I  know,  on  referring  to  statistics,  to  find  how  many 
persons  of  mature  years  there  are,  even  in  some  of  the  older 
States,  who  can  do  neither.  What  have  these  to  do  with  the 
telegraph  as  a  means  of  "instantaneous  diffusion  of  thought 
and  information  ?"  Should  not  the  powers  of  the  Federal  De 
ll 


162 

partment  of  education  be  enlarged,  so  as  to  embrace  the  super 
vision  of  the  educational  systems  of  the  several  States  before 
taking  over  the  telegraph  ?  Should  not  the  Government  print 
ing  office  also  undertake  the  manufacture  of  spelling  books  and 
New  England  primers,  so  as  to  insure  the  provision  at  the  mini 
mum  of  cost  of  those  prime  necessities  for  intellectual  and  moral 
cultura 

Many  more  persons  need  school  books  than  would  use  the 
telegraph  at  any  price.  "Why  should  not  the  manufacture  oi 
them  be  undertaken  by  the  Government,  and  the  present 
monopoly  of  the  Harpers  and  Appletons,  aided  and  abetted  by 
the  laws  conferring  copyrights,  be  completely  broken  down. 
And  when  this  has  been  done,  why  should  not  that  other  great 
feature  of  our  educational  system,  that  adjunct  of  the  telegraph 
in  the  "  diffusion  of  thoughts,  ideas  and  information  among  the 
people" — the  newspaper — also  be  furnished  by  the  Government. 
Within  the  last  ten  years  the  extent  of  telegraph  lines  in  the 
United  States  has  been  increased  four-fold,  and  the  average 
cost  of  messages  reduced  more  than  half,  while  the  cost  of 
school  books  and  of  newspapers  has  increased  a  hundred  per 
cent. 

If  we  admit  that  it  is  the  duty  of  Governments  to  make  pro 
vision  for  the  education  of  the  people,  must  we  not  admit  also 
that  there  are  other  duties  equally  pressing  which  should  be 
discharged  first.  Government  charity  naturally  proceeds  with : 
first,  what  is  due  to  humanity  ;  and  secondly,  what  is  due  to  the 
State.  Should  not  provision  be  made  for  helpless  infants,  the 
indigent  aged,  the  sick  and  destitute,  the  imbecile  and  infirm, 
before  large  expenditure  is  made  of  public  money  to  cheapen  so 
remote  an  incident  of  education  as  the  telegraph. 

You  say,  "  How  cheap  the  telegraph  could  be  operated  by  the 
Government  cannot  be  known  until  tried."  And  from  this 
remark  and  others  I  infer  that  you  consider  it  practicable  to 
increase  the  volume  of  telegraphic  business  indefinitely,  without 
materially  increasing  the  cost.  In  fact,  this  appears  to  be  the 
common  belief. 

In  this  connection  let  me  remark  that  sixty  per  cent,  of  the 
expenses  of  the  Western  Union  Company,  daring  the  last  fiscal 
year,  was  paid  for  wages.  Do  you  believe  that  the  Govern 
ment  could  have  hired  the  persons  who  performed  these  services 
at  lower  wages,  or  that  it  would  have  got  more  work  from  them 
for  the  same  cost  ?  A  lawful  day's  work  by  Government  em 
ployes  is  limited  to  eight  hours.  Ten  hours  is  the  minimum  in 
the  telegraph  service,  and  hundreds  work  an  average  of  twelve. 
Surely  it  will  not  be  expected  that  the  Government  will  discri 
minate  against  so  large  and  worthy  a  class  as  those  engaged  in 
maintaining  and  operating  the  telegraph.  And  yet,  if  it  under- 


163 

takes  the  business,  it  must  either  do  this  or  diminish  by  twenty 
per  cent  the  present  product  of  telegraph  operatives  without  re 
ducing  the  cost,  or  else  increase  the  force  and  the  cost  twenty- 
five  per  cent,  to  maintain  the  present  product. 

Every  telegraph  message  must  be  written  out  word  by  word 
by  the  hand  of  an  operator.  In  its  passage  over  the  wire  it 
occupies  the  circuit  to  the  exclusion  of  everything  else.  One 
operator  is  engaged  in  sending,  and  another,  at  the  same  time, 
in  receiving  it  The  average  capacity  of  operators  to  send  and 
receive  can  be  readily  ascertained.  Whether  it  be  300,  400  or 
500  messages  in  a  day,  when  the  limit  of  the  capacity  of  one  set 
is  reached  another  set  must  be  provided,  whose  capacity  has  the 
like  limit.  But  as  the  volume  of  business  increases  something 
more  is  involved  to  take  care  of  the  increase  than  the  mere  pro 
vision  of  additional  operators.  The  permanent  addition  of  400 
messages  a  day  to  those  now  passing  between  Chicago  and  New 
York,  requires  the  provision  of  an  additional  wire  between  those 
cities,  and  an  additional  operator  at  each.  For  every  two  addi 
tional  wires  between  these  places,  at  least  one  additional  operator 
besides  those  at  each  end  will  be  required  at  an  intermediate 
station — say  at  Buffalo — to  attend  repeaters,  and  to  assist  in  re 
ceiving  and  re-writing  the  messages  when,  as  sometimes  happens, 
the  weather  is  so  unfavorable  that  it  is  necessary  to  divide  the 
through  circuit  into  two  shorter  ones. 

The  stenographer  who  is  taking  this  from  my  dictation  can 
do  a  certain  amount  of  work  in  a  day.  Would  the  product  of 
his  labor  be  any  cheaper  if  he  had  twice  as  much  to  do  as  it  is 
possible  for  him  to  perform  ?  In  that  case,  however,  the  double 
work  would  involve  hiring  another,  and  would  cost  only  double 
wages.  But  in  respect  to  messages  by  telegraph,  when  the  wires 
and  operators  are  fully  occupied,  double  work  means — not  only 
double  cost  for  wages,  but  further  investment  of  capital  in  the 
"plant,"  followed  by  an  increase  in  the  cost  of  delivery,  stationery 
battery  and  repairs. 

It  does  not  matter  whether  the  business  is  conducted  by 
private  parties  or  by  the  Government — a  large  increase  of 
messages  will  always  be  followed  by  an  almost  proportional  in 
crease  of  operating  expenses ;  and  as  fast  as  the  limit  of  the 
capacity  of  lines  is  reached  a  further  permanent  investment  of 
capital  must  be  made  to  enlarge  their  capacity.  Whether  it  is 
better  that  the  extensions  of  the  telegraph  shall  continue  to  be 
paid  for  out  of  the  profits  accruing  from  the  business  or  be  added 
to  the  already  large  annual  deficit  of  the  postal  service,  and 
raised  by  taxation  upon  the  people,  it  is  for  the  people,  through 
their  representatives  in  Congress,  to  decide.  But  do  not  let  the 
people  be  deceived  by  the  fallacy  that  the  copying  of  messages, 
word  by  word,  by  the  fingers  of  telegraph  operators,  can  be 


164 

done  at  a  nominal  cost  simply  by  increasing  the  work  of  those 
who  have  already  about  all  they  can  do. 

The  duplex  apparatus  of  which  you  speak  we  have  now;  in 
successful  operation ;  and  perhaps  some  of  the  various  devices 
for  automatic  transmission  may  ultimately  be  found  practicable 
in  this  country.  But  the  value  of  these  appliances  consists  in 
increasing  the  capacity  of  wires,  and  thus  lessening  the  amount 
of  capital  which  would  otherwise  be  required  to  provide  them, 
and  not  in  lessening  the  amount  nor  in  reducing  the  cost  of  the 
labor  required  to  handle  messages. 

I  am  somewhat  disappointed  that  instead  of  meeting  squarely 
some  of  the  points  presented  in  my  letter,  you  seek  to  turn  their 
flank  by  a  comparison  between  the  postal  service  and  the  busi 
ness  of  the  Express  Companies,  which  you  present  with  this 
general  statement :  "  To  my  mind  all  the  points  you  make 
against  Government  control  of  the  telegraph  apply  with  equal 
or  greater  force  against  the  Government  control  of  the  mails." 
You  say  further  :  "  The  Express  Companies  can  urge  all  your 
reasons,  and  many  in  addition,  against  the  Government's  keeping 
the  postal  business  out  of  their  hands  and  depriving  them  of 
large  profits." 

I  know  that  you  do  not  mean  to  ignore  the  fact  that  the 
postal  service  has  always  been  managed  by  the  Government, 
nor  that  the  telegraph  is  the  product  of  private  enterprise. 
But  you  must  have  failed  to  remember  that  the  growth  of  the 
immense  and  largely  profitable  business  now  conducted  by  the 
Express  Companies  has  been  greatly  stimulated  by  the  failure 
of  the  Post-office  Department  to  transact  a  most  important  part 
of  the  business  which  naturally  and  properly  belongs  to  it  in  a 
manner  satisfactory  to  the  public. 

The  expenses  of  the  Post-office  Department  in  excess  of  its 
revenues  have  been  about  $50,000,000  within  the  last  15 
years.  During  this  period  a  profit  equal  to  at  least  half  this 
sum  has  been  gathered  by  the  Express  Companies,  much  of  it 
derived  from  business  which  the  Post-office  has  neglected  to  do 
at  all,  or  has  failed  to  do  properly,  or  which  the  public  is  un 
willing  to  trust  to  the  risks  of  its  mismanagement.  Much  of  the 
Government's  own  business  is  not  intrusted  to  its  own  mails,  and 
between  some  of  the  principal  cities  of  the  country  this  singu 
lar  spectacle  may  be  witnessed  almost  every  day  in  the  year : 
On  the  same  trains  which  carry  the  mails,  packages  of  bonds, 
currency  and  other  valuables  passing  between  the  Treasury  and 
its  branches  are  withheld  from  the  officials  in  the  postal  cars  and 
placed  in  charge  of  the  agents  of  the  Express  Companies.  Thus 
the  instinct  of  security  overcomes  the  temptations  of  the  frank 
ing  privilege,  and  the  Government  gives  practical  evidence  of  its 
confidence  in  the  fidelity  of  "  private  enterprise." 


165 

In  view  of  these  facts,  I  submit  that  the  Express  Companies 
have  no  occasion  to  "  urge  reasons  against  the  Government's 
keeping  the  postal  business  out  of  their  hands,  and  depriving 
them  of  large  profits."  Perhaps  the  charges  of  the  Express  Com 
panies  are  exorbitant,  and  their  profits  unreasonably  large.  But 
why  is  it,  if  u  it  costs  the  sender  fifty  times  as  much  to  send  a 
small  parcel  by  express  as  the  Government  charges  for  the  same 
weight  of  mailable  matter  for  the  same  distance  " — why  is  it,  I 
say,  that  the  public  continue  to  submit  to  such  oppression  at  the 
hands  of  "  private  enterprises,"  while  the  Government  is  ready 
and  willing,  yea,  anxious  even,  to  perform  the  service  for  one 
fiftieth  of  the  Express  Companies'  charge?  And  why  is  it  that 
in  all  sections  of  the  country  a  considerable  part  of  the  corres 
pondence,  and  especially  letters  covering  remittances,  contracts, 
and  other  valuable  papers,  after  being  placed  in  stamped  enve 
lopes,  whereby  full  postage  accrues  to  the  Government,  is  then 
given  to  the  Express  Companies,  and  the  charges  of  the  latter 
paid  thereon  in  addition  ? 

Your  statement  may  be  correct  that  "  after  their  experience 
of  the  blessings  of  cheap  and  uniform  Government  Postal  Ser 
vice,  the  people  would  not  tolerate  the  oppression  of  private 
monopoly  for  a  single  month."  But  it  seems  clear  to  me  that  a 
considerable  portion  of  the  public  either  do  not  coincide  in  your 
opinions  concerning  "  the  oppression  of  private  monopoly,"  or 
else  they — "rather  bear  those  ills  we  have  than  fly  to  others  that 
we  know  not  of." 

I  do  not  think  it  probable  that  our  people  would  consent  to  a 
transfer  of  the  postal  service  to  the  Express  Companies  unless 
upon  condition  that  the  present  rate  of  postage  on  letters  and 
other  mailable  matter  should  not  be  increased,  and  that  the 
facilities  now  provided  should  be  in  no  wise  diminished.  But  I 
apprehend  if  the  offer  were  made  to  the  Express  Companies  to 
take  charge  of  the  postal  service,  and  to  perform  it  in  as  efficient 
manner  as  it  is  now  conducted  for  two  thirds  the  present  rates, 
that  the  offer  would  be  accepted,  and  that,  in  view  of  saving 
the  Treasury  millions  of  annual  deficit,  and  the  public  millions 
in  postage,  the  latter  would  overcome  any  sentimental  attach 
ment  for  Government  officials,  and  acquiesce  in  the  change. 

I  do  remember  the  time  to  which  you  refer,  "  when  the  Gov 
ernment  charged  twenty-five  cents  postage  on  a  letter."  I  also 
remember  that  the  Express  Companies  provided  stamps  and  un 
dertook  the  transmission  of  letters  on  the  same  routes  at 
lower  rates,  including  special  delivery.  The  business  grew  so 
rapidly  that  it  threatened  to  seriously  diminish  the  revenues  of 
the  Post-office  Department.  Of  course,  the  Government 
promptly  interfered  to  check  the  growing  evil.  At  the  next 
session  of  Congress  a  bill  was  passed  prohibiting,  under  stringent 


166 

penalties,  the  carrying  of  mailable  matter  outside  the  mails,  and 
at  the  same  time,  a  reduction  of  postage  was  made  to  the 
uniform  rate  of  ten  cents,  followed  subsequently  by  further 
reductions,  to  the  rates  which  now  prevail.  If  I  am  correct  in 
these  statements,  you  will  comprehend  why  it  is  I  do  not  share 
your  hostility  to  "  private  enterprises"  in  general,  and  to  the  Ex 
press  Companies  in  particular. 

So  confident  am  I  in  the  ability  of  private  enterprise  to  com 
pete  successfully  with  official  agencies  in  the  performance  of  any 
service  for  the  public  requiring  promptness,  skill  and  fidelity, 
that  in  case  the  Government  should  take  the  telegraph,  and 
should  establish,  even  so  low  a  rate  of  charge  as  that  suggested 
by  you,  namely,  one  cent  a  word  for  all  distances,  I  would  de 
sire  no  surer  mode  of  acquiring  a  fortune  than  the  exclusive 
privilege  to  construct  and  operate  private  telegraph  lines  at  such 
rates  of  charge  as  I  should  see  fit  to  impose.  And,  in  that  event, 
I  should  confidently  expect  the  Government  would  ultimately 
become  one  of  my  best  customers. 

I  will  admit  the  truth  of  your  statement,  "  that  the  consump 
tion  of  whatever  is  desirable  is  always  in  proportion  to  its 
cost.  Make  a  desirable  thing  cheap  enough  and  there  is  no 
limit  to  the  demand  for  it."  But  with  this  proviso  :  that  in  re 
ducing  the  cost  there  is  no  deterioration  of  the  quality. 

It  is  a  peculiarity  of  Americans  that  they  rarely  grumble  at 
the  price  of  what  is  otherwise  completely  satisfactory.  The 
competition  of  railroads  has  entirely  broken  up  the  business 
of  carrying  passengers  on  the  canals,  although  the  cost  of 
traveling  has  been  thereby  largely  increased.  And  in  spite  of 
what  you  deem  the  present  exorbitant  charges  for  railway 
travel,  the  Pullman  palace  cars  are  crowded  everywhere  with 
persons  who  cheerfully  pay  four  dollars  a  day,  in  addition  to 
regular  fare,  for  the  sake  of  the  superior  accommodations. 

Your  surprise  at  my  statement  "concerning  the  ill  paying 
character  of  telegraph  stock"  is  not  greater  than  mine  is  at  the 
low  estimate  you  place  upon  the  value  of  the  Western  Union 
Company's  property,  and  your  allusion  to  its  "  watered  shares." 
Such  phrases  may  tickle  the  ear  and  stimulate  the  prejudices 
of  the  ignorant,  but  they  cannot,  I  am  sure,  affect  the 
judgment  of  thoughtful  men.  The  Western  Union  Company  is 
not  on  trial  for  an  alleged  undue  or  improper  expansion  of  capi 
tal  ;  and  if  it  were,  its  stockholders  are  the  only  proper  com 
plainants.  With  such  details  the  public  at  large  have  no  con 
cern.  What  is  it  to  them  whether  a  capital  of  forty  millions 
represents  that  sum  of  cash  paid  in,  or  only  four  millions,  and 
what  difference  does  it  make  to  the  stockholders  which  sum  is 
correct  if  they  get  no  dividends  at  all  ? 

During  the  seven  years  of  my  connection  with  the  telegraph 


167 

business,  the  value  of  telegraph  lines  and  property  in  the  United 
States  has  been  increased  by  the  expenditure  of  at  least  twelve 
millions  of  dollars  in  cash.  Is  the  capital  so  expended  any  the 
less  entitled  to  be  credited  with  the  interest  thereon  annually 
because  a  portion  of  it  accrued  from  the  profits  of  companies 
which  paid  no  dividends,  or  which  divided  only  a  portion  of 
their  earnings  ? 

The  telegraph  system  of  the  United  States  is  larger  in  extent 
and  equal  at  least  in  efficiency,  to  that  of  any  other  country  in 
the  world;  nor  is  it  surpassed  by  any  other  in  the  amount  of 
work  which  it  performs.  And  considering  the  higher  cost  here 
of  labor  to  construct,  maintain  and  operate  it,  and  of  material 
and  supplies  of  all  kinds,  and  of  the  greater  length  of  line  re 
quired  to  reach  the  same  number  of  people,  the  rates  for  mes 
sages  in  this  country  compare  favorably  with  the  average  rates 
in  Europe.  In  all  other  countries  (except  Canada)  the  tele 
graph  is  now  owned  and  operated  by  the  Government,  and  in 
most  of  them  it  has  been  built  at  the  cost  of  the  State.  But  in 
many  European  States  the  operation  of  the  telegraph  by  the  Gov 
ernment  results  in  an  annual  deficit,  which  is  raised  by  taxation. 
Even  in  England  the  question  of  profit  is  involved  in  doubt,  from 
the  fact  that  the  capital  account  is  added  to  largely  every  year. 
In  the  United  States,  however,  its  development  has  been  the  work 
of  private  individuals,  who  have  received  no  assistance  worth 
mentioning  either  from  the  Federal  or  State  Governments.  On 
the  other  hand  it  has  paid  in  taxes,  Federal,  State  and  Municipal, 
in  duties  directly  and  indirectly,  and  in  the  value  of  free  service 
for  communities  in  times  of  peril  and  disaster,  a  sum  greater  than 
the  "ten  per  centum  of  the  market  price  of  the  Western  Union 
Telegraph  stock,"  which  you  appear  to  believe  was  the  sum  ori 
ginally  "  paid  in  cash  by  the  stockholders."  But  even  if  you  were 
correct,  how  would  the  expediency  of  taking  the  telegraph,  or 
the  value  of  the  property,  or  the  rates  to  be  charged  for  its 
use,  be  affected  thereby  ?  Suppose  a  farmer  had  planted  twenty 
years  ago  a  thousand  fruit  trees,  at  a  cost  of  one  dollar  each,  and 
had  expended  nothing  on  them  since  except  to  harvest  the  crop 
every  year,  would  the  fact  of  the  small  cost  justify  the  demand 
of  a  purchaser  that  the  trees  should  be  sold  at  cost,  or  the  fruit 
at  a  price  which  would  be  a  fair  interest  on  the  cost  of  the  trees  ? 

The  value  of  anything  that  is  for  sale  is  that  sum  which  thev 
will  give  for  it  who  desire  to  buy.  But  in  considering  the  ex 
pediency  of  having  the  telegraph  in  the  United  States  operated 
by  the  Government,  the  question  of  the  value  of  existing  tele 
graph  properties  does  not  necessarily  enter.  We  admit  that 
the  Government  has  the  right  to  buy,  and  that  the  mode  of 
ascertaining  the  price  to  be  paid  is  fixed  by  law  and  agreement. 

If  it  be  true,  as  you  state,  that  "  the  present  telegraph  system  is 


168 

practically  a  monopoly,"  does  not  this  fact  prove  that  your  im 
pressions  concerning  the  profitableness  of  the  business,  and  the 
trifling  investment  required  to  establish  it,  are  erroneous? 
The  stock  and  bonded  capital  of  two  railway  companies, 
whose  united  roads  connect  New  York  and  Chicago,  is  nearly 
two  hundred  millions.  The  mere  statement  of  this  fact  shows 
the  difficulty  of  opening  a  competing  railway  route  between 
those  cities.  But  whether  the  cost  of  all  the  telegraph  property 
in  the  United  States  is  "  ten  per  centum  of  the  market  price  of 
the  Western  Union  Telegraph  stock,"  or  is  ten  or  twenty  times 
that  sum,  it  would  not  be  difficult  to  raise  the  capital  requisite 
to  duplicate  every  mile  of  telegraph,  wire  now  in  operation,  if  it 
could  be  made  to  appear  probable  that  the  business  would  pay. 
The  failure  of  competing  telegraph  companies  to  make  profits 
during  the  last  seven  years  is  not  a  sentiment  but  a  serious 
fact.  Of  this  abundant  evidence  can  be  found  among  the  stock 
holders  of  such  companies  in  your  own  city. 

We  have  absorbed  rival  lines  many  times,  and,  as  like  causes 
will  continue  to  produce  like  results,  it  is  highly  probable  we 
shall  do  so  hereafter.  With  but  few  exceptions,  however,  this 
process  of  absorption  has  been  simply  the  securing  of  property 
yielding  no  profit  to  its  owners  for  a  less  sum  than  was  expended 
to  create  it.  In  view  of  the  facility  with  which  telegraph  lines 
can  ,be  constructed,  is  it  not  reasonable  to  suppose  that,  if  we 
absorb  them  at  a  profit  to  their  owners,  they  would  be  construct 
ed  for  the  express  purpose  of  selling  out  to  us  until  our  capacity 
to  buy  was  exhausted  ? 

The  secret  of  what  you  call  the  "  monopoly  "  of  the  Western 
Union  is  an  open  one  when  you  look  at  it  from  the  stand-point 
of  fact.  It  is  not  the  exclusive  possession  of  essential  patents, 
nor  the  difficulty  of  raising  the  requisite  capital,  nor  inability  to 
procure  the  services  of  persons  skilled  in  the  scientific  and 
practical  departments  of  the  business.  The  reasons  are  : 

First.  The  Western  Union  Company  has  fairly  met  the  wants 
of  the  public  who  have  occasion  to  use  the  telegraph,  and  does 
its  work  better  than  its  competitors. 

Secondly.  The  expense  of  conducting  the  business  is  mainly 
for  labor,  and  increases  in  a  ratio  nearly  equal  to  the  increase  of 
the  volume. 

Thirdly.  The  annual  deterioration  of  the  plant  by  natural  de 
cay  is  equal  to  about  eight  per  centum  of  the  cost,  and  this  must 
be  earnea  in  excess  of  expenses  before  dividends  can  be  paid. 

You  ask — "  How  long  would  a  Postmaster-Greneral  remain 
in  office  if  found  dealing  harshly  or  unfairly  with  the  press?" 
In  reply,  permit  me  to  call  attention  to  an  incident  in  American 
history :  On  the  29th  of  July,  1835,  at  the  City  of  Charleston, 
S.  C.,  a  number  of  persons  made  forcible  entry  into  the  post- 


169 

office,  and  carried  off  packages  of  books  and  papers  and  burned 
them.  Soon  after,  at  a  large  public  meeting  of  citizens,  this 
flagrant  violation  of  the  laws  and  of  the  rights  of  individuals 
was  distinctly  sanctioned,  and  a  committee  of  twenty -one  was 
appointed  to  take  charge  of  the  United  States'  Mails,  at  the  head  of 
which  was  Ex-Senator  Kobert  Y.  Hayne.  Amos  Kendall  was 
then  Postmaster-General.  Under  date  August  4,  1835,  he  ad 
dressed  a  letter  to  the  Postmaster  at  Charleston,  from  which  I 
quote  the  following :  "  We  owe  an  obligation  to  the  laws,  but  a 
higher  one  to  the  communities  in  which  we  live ;  and  if  the 
former  be  perverted  to  destroy  the  lattery  it  is  patriotism  to  disre 
gard  them."  On  the  22nd  of  August  he  wrote  to  Samuel  L. 
Gouverneur,  Postmaster  at  New  York,  on  the  same  subject.  I 
quote  the  following  from  that  letter :  "  I  have  no  hesitation  in 
saying  that  I  am  deterred  from  giving  an  order  to  exclude  the 
whole  series  of  abolition  publications  from  the  Southern  mails 
only  by  a  want  of  legal  power,  and  that  if  I  were  situated  as 
you  are  I  would  do  as  you  have  done." 

How  long  after  the  perpetration  of  this  outrage,  thus  publicly 
and  officially  approved,  did  Amos  Kendall  and  his  subordinates 
"remain  in  office?"  And  how  long  is  it  since  another  Post 
master  General  requested  the  opinion  of  the  Attorney  General  of 
the  United  States  as  to  the  right  of  the  former  to  break  the  seals 
upon  matter  passing  through  the  mails,  for  the  alleged  purpose 
of  ascertaining  if  the  laws  were  being  violated  ?  Not  many 
months  since  Sir  Frank  Scudamore  was  charged  by  the  English 
press  with  suppressing  a  despatch  giving  an  account  of  a  strike 
among  the  telegraph  operators  on  the  Government  lines.  The 
charge  was  admitted,  but  the  offense  was  sought  to  be  justified, 
as  I  remember,  by  the  plea  that  the  despatch  contained  ex 
aggerated  statements,  which  it  was  not  for  the  public  interest  to 
permit  to  be  published. 

In  all  the  principal  cities  of  the  country  the  telegraph  is  avail 
able  every  hour  of  every  day  and  night  from  the  beginning  to 
the  end  of  the  year  ;  yet  in  the  same  cities,  in  the  evenings,  on 
Sundays  and  all  legal  holidays  the  post-offices  are  closed,  except 
for  an  hour  or  two,  and  delivery  by  carriers  suspended.  How 
long  would  the  public  submit  to  such  exclusion  from  the  tele 
graph  ?  You  will  say,  perhaps,  this  would  be  changed  if  the 
Government  had  the  telegraph  connected  with  the  postal  service. 
To  which  I  should  answer:  why  does  not  the  Post-office  Depart 
ment  give  evidence  of  an  appreciat'on  of  the  wants  of  the  public, 
and  of  a  disposition  to  make  provision  for  supplying  them  be 
fore  undertaking  a  new  service,  requiring  far  more  vigilant  at 
tention  than  that  which  it  now  performs  with  only  tolerable 
success  ? 

I  have  thus,  at  much  greater  length  than  I  expected  at  the 


170 

commencement  of  this  communication,  endeavored  to  reply  to 
the  principal  points  of  yours.  Your  experience  as  a  journalist, 
and  the  facility  you  have  acquired  by  long  practice  in  rapidly 
arranging  your  views  in  logical  order,  more  than  offset  the  con 
venience  a  stenographer  affords  to  me,  whose  duties  are  mainly 
executive,  and  relate  to  almost  every  department  of  business  m 
every  state.  If  I  have  not  succeeded  in  producing  "  a  radical 
change  "  of  your  notions  on  the  subject,  I  trust  that  the  state 
ments  herein  made  will,  at  least,  afford  some  justification 
for  the  tenacity  with  which  I  still  hold  to  my  own.  Hoping 
that  an  opportunity  for  a  further  canvass  of  the  question  in  the 
social  manner  you  suggest  may  soon  be  presented, 

I  am,  my  dear  sir, 

Very  truly  yours, 

WILLIAM  OKTON. 


ati 


